DELEUM BERHAD UNISON IN DIVERSITY - ChartNexus

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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.
Summary of Significant Accounting Policies (continued) For the Financial Year Ended 31 December 2009 C INTANGIBLE ASSETS (a) Goodwill Deleum Berhad Annual Report 2009 67 Goodwill represents the excess of the cost of acquisition of subsidiaries and associates over the fair value of the Group’s share of their identifiable net assets at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of cash generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose (see accounting policy Note R on impairment of non-financial assets). Goodwill on acquisitions of associates is included in investments in associates. Such goodwill is tested for impairment as part of the overall balance. (b) Contracts Acquired contracts with finite useful life are capitalised at cost and amortised using the straight line basis over their contractual periods or estimated useful lives, whichever is shorter. Acquired contracts are tested for impairment whenever indication of impairment exists. D INVESTMENTS Investments in subsidiaries and associates are shown at cost. At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount (see the accounting policy Note R on impairment of non-financial assets). Investments in other long term investments are stated at cost and an allowance for diminution in value is made where, in the opinion of Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the period the decline is identified. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged/ credited to the income statement. E PROPERTY, PLANT AND EQUIPMENT All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
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