Consolidated Financial Statements 2022 · Page 21

Public Investment Fund and its subsidiaries 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 
(All amounts in million SAR unless otherwise stated) 
Classification: External Confidential 
18 
 
3. 
SIGNIFICANT ACCOUNTING POLICIES THAT APPLY TO THE CONSOLIDATED FINANCIAL 
STATEMENTS (continued) 
 
3.1 
Basis of consolidation (continued) 
 
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Contingent consideration 
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an 
asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes 
in fair value recognized in the consolidated statement of profit or loss in accordance with IFRS 9. Other contingent consideration that is not 
within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in the consolidated statement 
of profit or loss. 
 
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred, the amount recognized for non-
controlling interests and the fair value at the acquisition-date of any previously held equity interest in the acquiree over the fair value of the 
net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration 
transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews 
the procedures used to measure the amounts to be recognized at the acquisition date.  
 
If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain 
is recognized in the consolidated statement of 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, or groups 
of 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.  
 
For the consolidated financial statements, the Group has availed the exemption under IFRS 1 whereby it has not applied IFRS 3 to either 
acquisitions of subsidiaries that are considered businesses under IFRS 3 or acquisition of interests in associates and joint ventures that 
occurred before 1 January 2021. Consequently, goodwill has been measured in accordance with the exemptions for business combination 
requirements of IFRS 1 (refer to note 5).  
 
Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill 
associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. 
Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-
generating unit retained.  
 
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the 
acquiree is remeasur