Untitled - Swissco Holdings Limited

NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2005
2. Significant Accounting Policies (continued)
(c)
Group accounting (continued)
(ii)
Associated companies
Associated companies are entities over which the Group has significant influence,
but not control, generally accompanying a shareholding of between and including
20% and 50% of the voting rights. Investments in associated companies are accounted
for in the consolidated financial statements using the equity method of accounting.
Investments in associated companies in the consolidated balance sheet include
goodwill (net of accumulated amortisation) identified on acquisition, where applicable.
Please refer to Note 2(d) for the Group’s accounting policy on goodwill.
Equity accounting involves recording investments in associated companies initially
at cost, and recognising the Group’s share of associated companies’ post-acquisition
results and its share of post-acquisition movements in reserves against the carrying
amount of the investments. When the Group’s share of losses in an associated company
equals or exceeds its interest in the associated company, including any other unsecured
receivables, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associated company.
In applying the equity method of accounting, unrealised gains on transactions between
the Group and its associated companies are eliminated to the extent of the Group’s
interest in the associated companies. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Where
necessary, adjustments are made to the financial statements of associated companies
to ensure consistency of accounting policies with those of the Group.
Please refer to Note 2(f) for the Company’s accounting policy on investments in
associated companies.
(iii)
Transaction costs
Costs directly attributable to an acquisition are included as part of the cost of
acquisition.
(d)
Goodwill
Goodwill represents the excess of the cost of an acquisition of subsidiaries or associated
companies over the fair value at the date of acquisition of the Group’s share of their
identifiable net assets. Goodwill recognised as intangible assets is tested at least annually
for impairment and carried at cost less accumulated impairment losses.
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