Page 66 - Annual Report

HONG KONG ACADEMY OF MEDICINE
香港醫學專科學院
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b) Basis of preparation of the financial statements (Continued)

The preparation of financial statements in conformity with HKFRSs requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods.

Judgements made by management in the application of HKFRSs that have significant
effect on the financial statements and major sources of estimation uncertainty are
discussed in note 20.

c) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the
Academy and structured entity controlled by the Academy. Control is achieved when the
Academy:

• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the
investee; and
• has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed
above.

When the Group has less than a majority of the voting rights of an investee, it has power
over the investee when the voting rights are sufficient to give it the practical ability to
direct the relevant activities of the investee unilaterally. The Group considers all relevant
facts and circumstances in assessing whether or not the Group’s voting rights in an
investee are sufficient to give it power, including:

• the size of the Group’s holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
• potential voting rights held by the Group, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Group has, or does
not have, the current ability to direct the relevant activities at the time that
decisions need to be made, including voting patterns at previous members’
meetings.

10

64 HKAM Annual Report 2021