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TNB Financial Report 2002
27
2. Summary of Significant Accounting Policies (Continued)
(d)
Goodwill
Goodwill arising on consolidation represents the excess of the purchase price over the fair value of the net assets of the subsidiary at the
date of acquisition. Goodwill is written off to reserves in the year of acquisition.
Negative goodwill represents the excess of the fair value of the Group’s share of identifiable net assets acquired over the purchase price.
Negative goodwill is accounted for as movement in reserves in the year of acquisition.
(e)
Foreign currency
Foreign currency transactions are converted into Ringgit Malaysia at exchange rates ruling at the transaction dates unless hedged by forward
foreign exchange contracts, in which case the rates specified in such forward contracts are used. Monetary assets and liabilities in foreign
currencies are translated at exchange rates ruling at the balance sheet date unless hedged by forward foreign exchange contracts, in which
case the rates specified in such forward contracts are used. All exchange differences are dealt with through the income statement.
Income statements of foreign entities are translated into Ringgit Malaysia at average rates of exchange for the financial year. Balance sheets
are translated into Ringgit Malaysia at the rates of exchange ruling at the balance sheet date. Exchange differences arising from the
translation of the results for the financial year at average rates and assets and liabilities at year end rates, and the restatement at year
end rates of the opening net investments in foreign subsidiaries are taken to a foreign currency translation reserve account as a component
of shareholders’ funds.
The principal closing rates used in translation of foreign currency amounts were as follows:
Foreign currency 2002 2001
RM
RM
1 USD 3.8000 3.8000
100 JPY 3.2182 3.1725
1 GBP 5.9022 5.5146
100 PKR 6.4054 5.9190
1 EURO 3.7448 Not applicable
(f)
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses.
The Directors have applied the transitional provisions of International Accounting Standard No. 16 (Revised) Property, Plant and Equipment
as adopted by Malaysian Accounting Standards Board which allow the freehold land, leasehold land, buildings and civil works to be stated
at their previous years’ valuations less depreciation. Accordingly, these valuations have not been updated.
Surpluses arising on revaluation are credited to revaluation reserve. Any deficit arising from revaluation is charged against the revaluation
reserve to the extent of a previous surplus held in the revaluation reserve for the same asset. In all other cases, a decrease in carrying
amount is charged to income statement.
Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into
account in determining profit/(loss) from ordinary activities before taxation. On disposal of revalued assets, amount in revaluation reserve
relating to those property, plant and equipment are transferred to retained profits.
Freehold land and capital project-in-progress are not depreciated. Leasehold land is amortised over the period of the respective lease ranging
from 5 to 99 years on a straight line basis.