Eng - IOI Group

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Notes To The Financial Statements cont’d3. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (“FRSs”) AND AMENDMENTS TO FRSscont’d3.3 Impact of FRSs and Amendments to FRSs adopted cont’d3.3.1 FRS 2: Share-based Payment cont’dThe financial impacts for the adoption of FRS 2 are as follows:GroupCompany2007 2006 2007 2006RM’000 RM’000 RM’000 RM’000Income statementDecrease in profit attributable to:Equity holders of the Company (25,969) (14,786) (24,377) (13,967)Minority interests (679) (343) - -Balance sheetCumulative decrease in retained earnings (40,755) (14,786) (38,344) (13,967)Cumulative increase in capital reserve 32,902 14,786 30,700 13,967Cumulative increase in share premium 7,644 - 7,644 -Cumulative increase in minority interests 209 - - -3.3.2 FRS 3: Business Combinations, FRS 136: Impairment of Assets and FRS 138: Intangible AssetsThe new FRS 3 has resulted in consequential amendments to two other accounting standards, FRS 136 and FRS 138. Inaccordance with the transitional provisions, FRS 3 has been applied for business combinations for which the agreement dateis on or after 1 January 2006.i. GoodwillPrior to 1 July 2006, goodwill was amortised on a straight line basis over its estimated useful life of not exceeding 20years and was tested for impairment only if there was any indication of impairment of the Cash-generating Units towhich the goodwill was attached to at each balance sheet date.The adoption of FRS 3 and the revised FRS 136 resulted in the Group ceasing annual goodwill amortisation. Goodwillis now carried at cost less accumulated impairment losses and is tested for impairment annually, or more frequently ifevents or changes in circumstances indicate that it might be impaired. Any impairment loss is recognised in the incomestatement and subsequent reversal is not allowed.In accordance with the transitional provisions of FRS 3, this change in accounting policy for goodwill has beenaccounted for prospectively for business combinations for which the agreement date is on or after 1 January 2006.The balance of unamortised goodwill with a carrying amount of RM415,830,000 as at 1 July 2006 has been carriedforward without amortisation but subject to impairment testing.This change in accounting policy has been applied prospectively and there is no restatement of comparativeamounts.135ANNUAL REPORT 2007IOI Corporation Berhad
Notes To The Financial Statements cont’d3. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (“FRSs”) AND AMENDMENTS TO FRSscont’d3.3 Impact of FRSs and Amendments to FRSs adopted cont’d3.3.2 FRS 3: Business Combinations, FRS 136: Impairment of Assets and FRS 138: Intangible Assets cont’dii.Previously recognised negative goodwillThe previously recognised “negative goodwill” represents the excess of the Group’s interest in the net fair value of theacquiree’s identifiable assets, liabilities and contingent liabilities over cost of acquisition.Prior to 1 July 2006, negative goodwill was taken up as reserve on consolidation and discount on acquisition ofassociates, and was amortised on a straight line basis over its estimated useful life of not exceeding 20 years.Under FRS 3, any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilitiesand contingent liabilities over cost of acquisition, after reassessment, is now recognised immediately in the incomestatement as it arises.The revised accounting policy has been applied prospectively. In accordance with the transitional provisions of FRS 3,the negative goodwill of subsidiaries of RM6,512,000 and negative goodwill of associates of RM27,761,000 as at 1July 2006 have been derecognised with a corresponding adjustments to the retained earnings.As the revised accounting policy has been applied prospectively, the change has no financial impact on amounts reported forfinancial year ended 30 June 2006 and prior periods. The financial impact to the Group for the current financial year arisingfrom the aforesaid changes in accounting policies is an increase in profit for the financial year attributable to a reduction ofnet amortisation charges of RM29,203,000. The negative goodwill recognised in the income statement for the acquisition ofshares from minority shareholders during the financial year amounted to RM263,000.3.3.3 FRS 5: Non-current Assets Held for Sale and Discontinued OperationsPrior to 1 July 2006, non-current assets (or disposal groups) held for sale were neither classified nor presented as currentassets or liabilities. There were no differences in the measurement of non-current assets (or disposal groups) held for sale andthose for continuing use.Under FRS 5, non-current assets (or disposal groups) held for sale are classified as current assets (and current liabilities, inthe case of non-current liabilities included within disposal groups) and are stated at the lower of carrying amount and fairvalue less costs to sell.Prior to 1 July 2006, a discontinued operation was recognised at the earlier of the date the Group enters into a binding saleagreement and the date the Board of Directors have approved and announced a formal disposal plan.Under FRS 5, a component of an entity is to be classified as a discontinued operation when the criteria to be classified asheld for sale have been met or it has been disposed off and such a component represents a separate major line of businessor geographical area of operations, is part of a single co-ordinated plan to dispose off a separate major line of business orgeographical area of operations or is a subsidiary acquired exclusively with a view to resale.IOI Corporation BerhadANNUAL REPORT 2007 136
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Our Vision... is to be a leading co
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Chairman’s StatementDear Valued S
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Responsibility“ Today, more than
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Group Performance Highlights2007 20
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Efficiency“The future belongs to
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PALM OIL BUSINESS STREAMManagement
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KepongKLCCKL SentralPetaling JayaKu
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Corporate InformationBOARD OF DIREC
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Profile of Directors cont’dDATO
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Profile of Directors cont’dDATUK
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Excellence in ExecutionOur commitme
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Audit Committee Report cont’dTERM
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Audit Committee Report cont’dTERM
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Corporate GovernanceINTRODUCTIONThe
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Corporate Governance cont’dTHE BO
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Statement on Internal ControlINTROD
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Other InformationCOMPOSITION OF SHA
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Group Properties cont’dB. DEVELOP
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Group Properties cont’dC. INVESTM
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Notice of Annual General MeetingNOT
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Shareholders Information cont’das
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fold herestampThe Company Secretary
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Eng - IOI Group

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