FINANCIAL STATEMENTS - Mewah Group

ANNUAL REPORT 2012NOTES TOTHE FINANCIAL STATEMENTSFor the financial year ended 31 December 20122. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.3 Group accounting (continued)(c) Associated companies (continued)(i)AcquisitionsInvestments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fairvalue of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costsdirectly attributable to the acquisition. Goodwill on associated companies represents the excess of the cost of acquisitionof the associate over the Group’s share of the fair value of the identifiable net assets of the associate and is included inthe carrying amount of the investments.(ii) Equity method of accountingIn applying the equity method of accounting, the Group’s share of its associated companies’ post-acquisition profits orlosses are recognised in profit or loss and its share of post-acquisition other comprehensive income is recognised in othercomprehensive income. These post-acquisition movements and distributions received from the associated companies areadjusted against the carrying amount of the investments. When the Group’s share of losses in an associated companiesequals or exceeds its interest in the associated companies, including any other unsecured non-current receivables, theGroup does not recognise further losses, unless it has obligations to make or has made payments on behalf of theassociated companies.Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of theGroup’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction providesevidence of impairment of the assets transferred. The accounting policies of associated companies have been changedwhere necessary to ensure consistency with the accounting policies adopted by the Group.(iii) DisposalsGains and losses arising from partial disposals or dilutions in investments in associated companies in which significantinfluence is retained are recognised in profit or loss.Investments in associated companies are derecognised when the Group loses significant influence. Any retained equityinterest in the entity is remeasured at its fair value. The difference between the carrying amount of the retained interestat the date when significant influence is lost and its fair value is recognised in profit or loss.Please refer to Note 2.6 for the accounting policy on investments in associated companies in the separate financialstatements of the Company.53