Eng - IOI Group

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