Business combinations and Goodwill  2. Summary of significant accounting policies continued Foreign exchange  A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If Dialog loses control over a  subsidiary, it:  Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration  transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the  Group measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.  Acquisition costs incurred are expensed and included in administrative expenses.  When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance  with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded  derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is  remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair  value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with IAS 39 either in profit or loss or as  a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled  within equity.  Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling  interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the  subsidiary acquired, the difference is recognised in profit or loss.  After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired  in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the  combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash- generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the  carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured  based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.  The functional currency for the Group entities is generally the currency in which they primarily generate and expense cash. Each entity in the Group  determines its own functional currency. Accordingly, the assets and liabilities of companies whose functional currency is other than the US dollar are  included in the consolidation by translating the assets and liabilities into the presentation currency (US$) at the exchange rates applicable at the end of  the reporting period. Equity accounts are measured at historical rates. The statements of income and cash flows are translated at the average exchange  rates during the year. The exchange differences arising on the translation are directly recognised in equity (other reserves). On disposal of an entity, the  component of other comprehensive income relating to that particular entity is recognised in the income statement.   Derecognises the assets (including goodwill) and liabilities of the subsidiary;   Derecognises the carrying amount of any non-controlling interest;   Derecognises the cumulative translation differences, recorded in equity;   Recognises the fair value of the consideration received;   Recognises the fair value of any investment retained;   Recognises any surplus or deficit in profit or loss;   Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.  63