Eng - IOI Group

Notes To The Financial Statements cont’d5. SIGNIFICANT ACCOUNTING POLICIES cont’d5.1 Basis of Consolidation cont’d5.1.1 Subsidiaries cont’dSubsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continueto consolidate until the date that such control ceases.Intragroup balances, transactions and unrealised gains and losses on intragroup transactions are eliminated in full. Intragrouplosses may indicate an impairment that requires recognition in the consolidated financial statements. If a subsidiary usesaccounting policies other than those adopted in the consolidated financial statements for like transactions and events insimilar circumstance, appropriate adjustments are made to its financial statements in preparing the consolidated financialstatements.The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds and the Group’sshare of its net assets as of the date of disposal including the carrying amount of goodwill and the cumulative amount of anyexchange differences that relate to the subsidiary, is recognised in the consolidated income statements.Minority interests at the balance sheet date, are the portion of the net assets of subsidiaries attributable to equity intereststhat are not owned by the Company, whether directly or indirectly through subsidiaries. The minority interests are presentedin the consolidated balance sheets and statements of changes in equity within equity, separately from equity attributableto the equity shareholders of the Company. Minority interests’ share of results of the Group is presented on the face of theconsolidated income statements as an allocation of the total profit or loss for the financial year between minority interests andthe equity holders of the Company.Where losses applicable to the minority in a subsidiary exceed the minority interests in the equity of that subsidiary, theexcess, and any further losses applicable to the minority, are allocated against the Group’s interest except to the extentthat the minority has a binding obligation and is able to make additional investment to cover the losses. If the subsidiarysubsequently reports profits, such profits are allocated to the Group’s interest until the minority’s share of losses previouslyabsorbed by the Group has been recovered.When the Group purchases a subsidiary’s equity from minority interests for cash consideration and the purchase price isestablished at fair value, the accretion of the Group’s interest in the subsidiary is treated as purchases of equity interest forwhich the acquisition method of accounting is applied.However, the changes of the Group’s interest in a subsidiary that does not satisfy the conditions of cash and fair value asdescribed in the preceding paragraph are treated as equity transactions. Any difference between the Group’s share of netassets before and after the change, and any consideration received or paid is adjusted to or against group reserves.147ANNUAL REPORT 2007IOI Corporation Berhad