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THONG GUAN INDUSTRIES BERHAD

35

2.

Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by the Group entities, unless otherwise stated.

  • (a)

    Basis of consolidation

  • (i)

    Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when

the so as

Group has the ability to exercise its power to govern the financial and operating policies of an entity to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Under the purchase method of accounting, the results of the subsidiaries acquired or disposed during the year is included from the date of acquisition or up to the date of disposal. At the date of acquisition, the cost of acquisition and the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree are determined and these values are reflected in the Group’s financial statements.The difference between the acquisition cost and the said net fair value is reflected as goodwill or negative goodwill as appropriate.

Under the pooling-of-interests method of accounting, the results of entities or businesses under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established.The assets and liabilities acquired were recognised at the carrying amounts recognised previously in the Group’s controlling shareholder’s consolidated financial statements.The difference between the cost of acquisition and the nominal value of the shares acquired together with the share premium are taken to merger reserve (or adjusted against any suitable reserve in the cash of debit differences).The other components of equity of the acquired entities are added to the same components within Group equity.

Subsidiaries are consolidated using the pooling-of-interests method of accounting except for the following subsidiaries which are consolidated using the purchase method of accounting :

  • -

    TGP Marketing Sdn. Bhd.

  • -

    Ebontech Sdn. Bhd.

  • -

    Thong Guan Plastic Industries (Suzhou) Co., Ltd.

  • -

    888 Cafe Sdn. Bhd. (formerly known as Tea G International Sdn. Bhd.)

  • -

    TGP Plaspack (Suzhou) Co. Ltd.

Investments in subsidiaries are stated in the Company’s balance sheet at cost less any impairment losses, unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale).

(ii)

Changes in Group composition

Where a subsidiary issues new equity shares to minority interests for cash consideration and the issue price has been established at fair value, the reduction in the Group’s interests in the subsidiary is accounted for as a disposal of equity interest with the corresponding gain or loss recognised in the income statement.

When a group purchases a subsidiary’s equity shares from minority interests for cash consideration and the purchase price has been established at fair value, the accretion of the Group’s interests in the subsidiary is accounted for as a purchase of equity interest for which the acquisition method of accounting is applied.

The Group treats all other changes in group composition as equity transactions between the Group and its minority shareholders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves

(iii)

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

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