IIG Prospectus - London Stock Exchange

-4-Gains or losses arising from transactions with associates are eliminated against the investment in theassociate to the extent of the Company’s interest in the associate.Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiableassets, liabilities and contingent liabilities of the associate recognized at the date of acquisition isrecognized as goodwill. The goodwill is included within the carrying amount of the investment inassociates and is assessed for impairment as part of the investment. Any excess of the Company’sshare of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost ofacquisition, after reassessment, is recognized immediately in income statement.h) GoodwillGoodwill arising on an acquisition of a subsidiary/associate represents the excess of the cost of theacquisition over the fair value of the identifiable assets, liabilities and contingent liabilities as at the dateof the acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured atcost less any accumulated impairment losses.For the purpose of impairment testing, goodwill is allocated to each of the Company’s cash-generatingunits expected to benefit from the synergies of the combination. Cash-generating units to which goodwillhas been allocated are tested for impairment annually, or more frequently when there is an indicationthat the unit may be impaired. If the recoverable amount of the cash-generating unit is less than thecarrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of anygoodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carryingamount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in asubsequent period.On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of theincome statement on disposal.The Company’s policy for goodwill arising on the acquisition of an associate is described under‘Investments in associates’ in note 2(g).i) Joint venturesA joint venture is a contractual arrangement whereby the Company and other parties undertake aneconomic activity that is subject to joint control that is when the strategic financial and operating policydecisions relating to the activities require the unanimous consent of the parties sharing control.Where the company undertakes its activities under joint venture arrangements directly, the Company’sshare of jointly controlled assets and any liabilities incurred jointly with other venturers are recognized inthe financial statements of the relevant entity and classified according to their nature. Liabilities andexpenses incurred directly in respect of interests in jointly controlled assets are accounted for on anaccrual basis. Income from the sale or use of the Company’s share of the output of jointly controlledassets, and its share of joint venture expenses, are recognized when it is probable that the economicbenefits associated with the transactions will flow to/from the Company and their amount can bemeasured reliably.j) Fixed assetsThe initial cost of fixed assets comprises its purchase price and any directly attributable costs of bringingthe asset to its working condition and location for its intended use. Expenditures incurred after the fixedassets have been put into operation, such as repairs and maintenance and overhaul costs, are normallycharged to income in the period in which the costs are incurred. In situations where it can be clearlydemonstrated that the expenditures have resulted in an increase in the future economic benefitsexpected to be obtained from the use of an item of fixed assets beyond its originally assessed standardof performance, the expenditures are capitalized as an additional cost of fixed assets.F-45