DELEUM BERHAD UNISON IN DIVERSITY - ChartNexus

66 Unison in Diversity
Summary of Significant Accounting Policies (continued)
For the Financial Year Ended 31 December 2009
B ECONOMIC ENTITIES IN THE GROUP (continued)
(1) Subsidiaries (continued)
Under the purchase method of accounting, subsidiaries are fully consolidated from the date on which control
is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition
is measured as fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the
date of exchange, plus cost directly attributable to the acquisition. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the
fair value of the Group’s share of identifiable net assets acquired at the date of acquisition is reflected as goodwill
on consolidation (see the accounting policy Note C on goodwill). If the cost of acquisition is less than the fair value
of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Minority interest represents that portion of the profit or loss and net assets of a subsidiary attributable to equity
interests that are not owned, directly or indirectly through subsidiaries, by the parent. It is measured at the
minorities’ share of fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the
minorities’ share of changes in the subsidiaries’ equity since that date.
Intragroup transactions, balances and unrealised gains on transactions between the companies in the Group are
eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share
of its net assets as of the date of disposal including the cumulative amount of any exchange differences, that relate
to the subsidiary is recognised in the consolidated income statement.
(2) Associates
Associates are enterprises in which the Group exercises significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the associates but not the power to exercise control
over those policies. Investments in associates are accounted for in the consolidated financial statements by the
equity method of accounting and are initially recognised at cost.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and
its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an
associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group’s
interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s
interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on
impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to
financial statements of associates to ensure consistency of accounting policies with those of the Group.
Dilution gains and losses in associates are recognised in the income statement.
(3) Transactions with minority interests
The Group applies a policy of treating transactions with minority interests as transactions with parties external to
the Group. For purchases from minority interests, the excess of the cost of acquisition over the relevant share of
the carrying value of net assets of the subsidiary acquired is reflected as goodwill. Negative goodwill is recognised
immediately in the income statement. For disposal to minority interests, differences between any proceeds received
and the relevant share of minority interests and goodwill are included in the income statement.