Pg 147 - Berjaya Corporation Berhad

2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)(b) Basis of Consolidation (cont’d)Under the acquisition method of accounting, the results of subsidiary companies acquired or disposed of during the financialyear are included in the consolidated financial statements from the effective date of acquisition or up to the effective date ofdisposal, as appropriate. The assets and liabilities of a subsidiary company are measured at their fair values at the date ofacquisition and these values are reflected in the consolidated balance sheet. The difference between the acquisition cost andthe fair values of the Group’s share of net assets of the acquired subsidiary company at the date of acquisition is included inthe consolidated balance sheet as goodwill or negative goodwill arising from consolidation, as appropriate.In the preparation of the consolidated financial statements, the financial statements of all subsidiary companies are adjustedfor the material effects of dissimilar accounting policies. Intragroup transactions, balances and unrealised gains are eliminatedon consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminatedon consolidation unless cost cannot be recovered.Minority interests in the consolidated balance sheet consist of the minorities’ share of fair value of the identifiable assets andliabilities of the acquiree as at acquisition date and the minorities’ share of movements in the acquiree’s equity since then.(c) Associated CompaniesAssociated companies are companies in which the Group has a long-term equity interest and where it exercises significantinfluence over its financial and operating policies through Board representation. Investments in associated companies areaccounted for in the consolidated financial statements by the equity method of accounting based on the latest audited ormanagement financial statements of the associated companies made up to the Group’s financial year-end.Under the equity method of accounting, the Group’s share of results of associated companies during the financial year is includedin the consolidated financial statements. The Group’s share of results of associated companies acquired or disposed of duringthe year, is included in the consolidated income statement from the date that significant influence effectively commences oruntil the date that significant influence effectively ceases, as appropriate.Unrealised gains on transactions between the Group and the associated companies are eliminated to the extent of the Group’sinterest in the associated companies. Unrealised losses are eliminated unless cost cannot be recovered.The Group’s interest in associated companies is carried in the consolidated balance sheet at cost plus the Group’s share ofpost-acquisition retained profits or accumulated losses and other reserves, less impairment losses.(d) Property, Plant and Equipment and DepreciationProperty, plant and equipment are stated at cost less accumulated depreciation and impairment losses with the exception ofhotel properties.Hotel properties comprise hotel land, building and integral plant and machinery. It is the Group’s practice to maintain theseproperties at a high standard and condition such that residual values are at least equal to book values and consequently,depreciation would be insignificant. Accordingly, no depreciation is provided on freehold hotel properties or those hotel propertieswith unexpired lease tenure of 50 years or more. The related maintenance expenditure is dealt with in the income statement.To establish whether the residual values of the hotel properties are at least equal to their respective book values, all hotelproperties are appraised by independent professional valuers at least once in every five years based on open market value.Where the residual values of the hotel properties are less than their respective book values, a write down of book values to itsrecoverable amounts will be made. The amount of reduction will be recognised as an expense in the income statement.Berjaya Land Berhad (201765-A) Annual Report 200649