Notes to the Financial Statements (cont’d)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Significant Accounting Policies (cont’d)
Basis of Consolidation (cont’d)
Associates are entities, including unincorporated entities, in which the Group has significant influence, but no control, over the financial and operating policies.
Associates are accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Group’s share of the profit or loss of the equity accounted associates, after the date that significant influence commences until date that significant influence ceases.
Equity accounting is discontinued when the carrying amount of the investment in associates reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associates.
Investment in associate are stated in the Company’s balance sheet at cost less impairment losses, unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale).
Changes in group composition
When a subsidiary issue new equity shares to minority interests for cash consideration and the issue price had been established at fair value, the reduction in the Group’s interests in the subsidiary is accounted for as a disposal of equity interests with the corresponding gain or loss recognised in the income statement.
When a group purchases a subsidiary’s equity shares from minority interest for cash consideration and the purchase prices had been established at fair value, the accretion of the Group’s interest in the subsidiary is accounted for as a purchase of equity interests for which the acquisition method of accounting is applied.
The Group treats all other changes in group composition as equity transaction 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.
Transactions eliminated on consolidation
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Annual Report 2009