Pg 108 - Berjaya Corporation Berhad

Notes To The Financial Statements30 April 20082 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.2 Summary of Significant Accounting Policies (Cont’d)(a) Subsidiaries and basis of consolidation (cont’d)Subsidiary companies are consolidated using the purchase method of accounting. Under the purchase method ofaccounting, the results of subsidiary companies acquired during the financial year are included in the consolidatedfinancial statements from the effective date of acquisition and continue to be consolidated until the date such controlceases. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assetsacquired and liabilities and contingent liabilities assumed at the date of acquisition. At the Group level, provisions aremade for the acquiree’s contingent liabilities existing at the date of acquisition as the Group deems that it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligations. The cost of anacquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilitiesincurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilitiesand contingent liabilities represents goodwill.Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities overthe cost of acquisition is recognised immediately in income statement.Uniform accounting policies are adopted in the consolidated financial statements for similar transactions and otherevents in similar circumstances. In the preparation of the consolidated financial statements, the financial statements ofall subsidiary companies are adjusted for the material effects of dissimilar accounting policies. Intragroup transactions,balances and unrealised gains are eliminated on consolidation and the consolidated financial statements reflect externaltransactions only. Unrealised losses are eliminated on consolidation unless cost cannot be recovered.Minority interests represents the portion of the results for the year and net assets in subsidiaries not held by the Group.Minority interests is measured at the minorities’ share of fair value of the identifiable assets and liabilities of the acquireeas at acquisition date and the minorities’ share of movements in the acquiree’s equity since then.In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairmentlosses.(b) Associated companiesAssociated companies are entities in which the Group has significant influence and where the Group participates in itsfinancial and operating policies through Board representation. Investments in associated companies are accounted forin the consolidated financial statements by the equity method of accounting based on the latest audited or managementfinancial statements of the companies concerned made up to the Group’s financial year-end. Uniform accountingpolicies are adopted for like transactions and events in similar circumstances.Under the equity method of accounting, the Group’s investment in associated companies is initially recognised in theconsolidated balance sheet at cost adjusted for the Group’s share of post-acquisition changes in the share of the netassets of the associated companies, less impairment losses. The Group’s share of results of associated companiesduring the financial year is included in the consolidated financial statements. The Group’s share of results of associatedcompanies acquired or disposed of during the year, is included in the consolidated income statement from the date thatsignificant influence effectively commences until the date that significant influence effectively ceases, as appropriate.Unrealised gains and losses on transactions between the Group and the associated companies are eliminated to theextent of the Group’s interest in the associated companies. Unrealised losses are eliminated unless cost cannot berecovered.Goodwill relating to an associated company is included in the carrying amount of the investment and is not amortised.Any excess of the Group’s share of net fair value of the associated company’s identifiable assets, liabilities and contingentliabilities over the cost of investment is excluded from the carrying amount of the investment and is instead included asincome in the determination of the Group’s share of associated company’s income statements in the period in whichthe investment is acquired.Berjaya Sports Toto Berhad (9109-K) Annual Report 2008 47