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Notes to the Financial StatementsFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 20093. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED)(b)Standards, amendments to published standards, interpretations and improvements to existing standards that areapplicable to the Group and Company but not yet effective (continued)• FRS 119 “Employee Benefits” (effective from 1 January 2010) clarifies that a plan amendment that results in achange to the extent in which benefit promises are affected by future salary increases is a curtailment, whilean amendment that changes benefits attributable to past service gives rise to a negative past service cost ifit results in a reduction in the present value of the defined benefit obligation. The definition of return on planassets has been amended to state that plan administration costs are deducted in the calculation of return onplan assets only to the extent that such costs have been excluded from measurement of the defined benefitobligation.• FRS 120 “Accounting for Government Grants and Disclosure of Government Assistance” (effective from1 January 2010) clarifies that the benefit of a below market rate government loan is measured as a differencebetween the carrying amount in accordance with FRS 139 and the proceeds received.• FRS 123 “Borrowing Costs” (effective from 1 January 2010) which replaces FRS 123 2004, requires an entity tocapitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifyingasset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of thatasset. The option of immediately expensing those borrowing costs is removed. The improvement to FRS 123clarifies that the definition of borrowing costs includes interest expense calculated using the effective interestmethod defined in FRS 139. The initial application of the standard will constitute a change in accounting policyas the Group and Company have opted to expense off borrowing costs in the current accounting policy. TheGroup and Company will have to capitalise all borrowing costs in relation to the capital expenditure incurredeffective 1 January 2010 on qualifying assets, thus resulting in lower borrowing costs in the income statementand higher property, plant and equipment balance.• The revised FRS 127 “Consolidated and Separate Financial Statements” (effective prospectively from 1 July2010) requires the effects of all transactions with non-controlling interests to be recorded in equity if there isno change in control and these transactions will no longer result in goodwill or gains and losses. The standardalso specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fairvalue, and a gain or loss is recognised in profit or loss. On application of the revised standard, gains or lossesor goodwill which would have arisen under the current policy on transactions with minority interests, will berecognised in reserves.FRS 127 “Consolidated and Separate Financial Statements” (effective from 1 January 2010) clarifies that wherean investment in a subsidiary that is accounted for under FRS 139 is classified as held for sale under FRS 5,FRS 139 would continue to be applied.• FRS 128 “Investments in Associates” (effective from 1 January 2010) clarifies that an investment in an associateis treated as a single asset for impairment testing purposes. Reversals of impairment are recorded as anadjustment to the carrying amount of the investment to the extent that the recoverable amount of theassociate increases.Annual Report 2009 • 173