Notes to the Financial Statements - SingTel

Notes to the Financial StatementsFor the financial year ended 31 March 20112.2 Group AccountingThe accounting policy for subsidiaries, associated and joint venture companies in the Company’s financial statements is statedin Note 2.4. The Group’s accounting policy on goodwill is stated in Note 2.15.1.2.2.1 SubsidiariesSubsidiaries are entities (including special purpose entities) controlled by the Group. Control exists when the Group has thepower, directly or indirectly, to govern the financial and operating policies of the entity, generally accompanying a shareholdingof more than one half of the voting rights. Subsidiaries are consolidated from the date that control commences until the datethat control ceases. All significant inter-company balances and transactions are eliminated on consolidation.2.2.2 Associated companiesAssociated companies are entities over which the Group has significant influence, but not control or joint control, generallyaccompanying a shareholding of between 20 per cent and 50 per cent of the voting rights.Investments in associated companies are accounted for in the consolidated financial statements using the equity method ofaccounting. Equity accounting involves recording the investment in associated companies initially at cost, and recognising theGroup’s share of the post-acquisition results of associated companies in the consolidated income statement, and the Group’sshare of post-acquisition reserve movements in reserves. The cumulative post-acquisition movements are adjusted against thecarrying amount of the investments in the consolidated statement of financial position.In the consolidated statement of financial position, investments in associated companies include goodwill on acquisitionidentified on acquisitions completed on or after 1 April 2001, net of accumulated impairment losses. Goodwill is assessed forimpairment as part of the investment in associated companies.When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, includingloans that are in fact extensions of the Group’s investment, the Group does not recognise further losses, unless it has incurredor guaranteed obligations in respect of the associated company.Unrealised gains resulting from transactions with associated companies are eliminated to the extent of the Group’s interest inthe associated company. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that thereis no evidence of impairment.2.2.3 Joint venture companiesJoint venture companies are entities over which the Group has contractual arrangements to jointly share the control with oneor more parties, and none of the parties involved has unilateral control over the entities’ economic activities.The Group’s interest in joint venture companies is accounted for in the consolidated financial statements using the equitymethod of accounting.In the consolidated statement of financial position, investments in joint venture companies include goodwill on acquisitionidentified on acquisitions completed on or after 1 April 2001, net of accumulated impairment losses. Goodwill is assessed forimpairment as part of the investment in joint venture companies.The Group’s interest in its unincorporated joint venture operations is accounted for by recognising the Group’s assets andliabilities from the joint venture, as well as expenses incurred by the Group and the Group’s share of income earned from thejoint venture, in the consolidated financial statements.Unrealised gains resulting from transactions with joint venture companies are eliminated to the extent of the Group’s interestin the joint venture company. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent thatthere is no evidence of impairment.ANNUAL REPORT 2010/2011 103