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Allianz Annual Report 2012

Any contingent consideration to be transferred by the ac- quirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contin- gent consideration – which is deemed to be an asset or a liability – will be recognized in accordance with the appli- cable IFRS. If the contingent consideration is classified as equity, it will not be remeasured and its subsequent settle- ment will be accounted for within equity. Any additional acquired share of interest after having ob- tained control does not affect previously recognized good- will. Transactions with non-controlling interests, i.e. chang- es in a parent’s ownership interest in a subsidiary that do not result in a loss of control, are accounted for as equity transactions.Lossesareallocatedtoanon-controllinginter- est even if they exceed the non-controlling interest’s share of equity in the subsidiary. Any retained non-controlling in- vestmentatthedatethatcontrolislostisremeasuredtofair value. Whenthe­AllianzGroupacquiresabusiness,itassessesthe financial assets and liabilities assumed for appropriate classification and designation in accordance with the con- tractual terms, economic circumstances and pertinent conditions at the acquisition date. Business combinations prior to 1 January 2010 are account- ed for using the purchase method. The purchase method requires that the ­Allianz Group allocates the cost of a busi- ness combination on the date of acquisition by recognizing the acquired’s identifiable assets, liabilities and certain contingent liabilities at their fair values. The cost of a busi- ness combination represents the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the acquisition date, plus any costs directly at- tributable to the acquisition. If the acquisition cost of the business combination exceeds the ­Allianz Group’s propor- tionate share of the fair value of the net assets of the ac- quiree, the difference is recorded as goodwill. Any non- controlling interest is recorded at the non-controlling interest’s proportion of the fair value of the net identifiable assets of the acquiree. For Business combinations with an agreement date before 31 March 2004, non-controlling interests are recorded at their proportion of the pre-acquisition carrying amounts of the identifiable assets and liabilities. Subsidiaries are consolidated as from the date on which control is obtained by the ­Allianz Group. Subsidiaries are consolidated up to the date on which the ­Allianz Group no longer maintains control. Accounting policies of subsidiar- ies have been adjusted where necessary to ensure consis- tency with the accounting policies adopted by the ­Allianz Group. The effects of intra-­Allianz Group transactions have been eliminated. Third-party assets held in an agency or fiduciary capacity are not assets of the ­Allianz Group and are not presented in these consolidated financial statements. Business combinations including acquisitions and disposals of non-controlling interests A business combination occurs when the ­Allianz Group obtains control over a business. Business combinations from 1 January 2010 are accounted for using the acquisition method. The cost of an acquisi- tion 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 acquired. Acquisition-related costs are generally recognized as ex- penses. For each business combination, the ­Allianz Group has an option to measure any non-controlling interests in the acquired either at the acquisition date fair value or at the non-controlling interest’s proportionate share of the acquired’s identifiable net assets. The ­Allianz Group uses an expanded presentation for insurance contracts ac- quired in a business combination or portfolio transfer to measure insurance contracts in line with the accounting policy of the ­Allianz Group, while presenting the difference to fair value at inception as an intangible asset. Goodwill is measured as the difference at the acquisition date between the cost of the acquisition and the fair value of the net assets acquired. The acquirer recalculates any previously-held equity interest to fair value at the date of obtaining control, with the difference being recorded in the consolidated income statement. If the ­Allianz Group’s pro- portionate share in the fair value of the net assets exceeds the acquisition cost, the ­Allianz Group reassesses the iden- tification and measurement of the identifiable assets, lia- bilities and contingent liabilities, as well as the measure- ment of the cost of the combination and recognizes any excess remaining after that assessment immediately in income. Annual Report 2012    Allianz Group D Consolidated Financial Statements 219 Consolidated Balance Sheets 220 Consolidated Income Statements 221 Consolidated Statements of Comprehensive Income 222 Consolidated Statements of Changes in Equity 223 Consolidated Statements of Cash Flows 226 Notes to the Consolidated Financial Statements 227