Al-`Aqar Healthcare REIT Annual Report 2019

Al-`Aqar Healthcare REIT 06 FINANCIAL STATEMENT 119 Notes To The Financial Statements For The Financial Year Ended 31 December 2019 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of accounting The financial statements of the Group and of the Fund have been prepared under the historical cost convention except for certain financial assets and financial liabilities which are measured at fair values as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration in exchange for assets. 3.2 Basis of consolidation The consolidated financial statements comprise the financial statements of the Fund and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting period as the Fund. Consistent accounting policies are applied to like transactions and events in similar circumstances. The Fund controls an investee if and only if the Fund has all the following: (i) Power over the investee (such as existing rights that give it the current ability to direct the relevant activities of the investee); (ii) Exposure, or rights, to variable returns from its involvement with the investee; and (iii) The ability to use its power over the investee to affect its returns. When the Fund has less than a majority of the voting rights of an investee, the Fund considers the following in assessing whether or not the Fund’s voting rights in an investee are sufficient to give it power over the investee: (i) The contractual arrangement with the other vote holders of the investee; (ii) Rights arising from other contractual arrangements; and (iii) The Fund’s voting rights and potential voting rights. When the Fund has less than a majority of the voting rights of an investee, the Fund considers the following in assessing whether or not the Fund’s voting rights in an investee are sufficient to give it power over the investee: (i) The contractual arrangement with the other vote holders of the investee; (ii) Rights arising from other contractual arrangements; and (iii) The Fund’s voting rights and potential voting rights. Subsidiaries are consolidated when the Fund obtains control over the subsidiary and ceases when the Fund loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.