kian joo can factory berhad

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(d) Investment
Investment in subsidiary companies, associated company and other long term investment are stated at cost
less impairment losses. The policy for the recognition and measurement of impairment losses is in
accordance with Note 2 (m).
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts
is charged or credited to the income statement.
(e) Goodwill
Goodwill represents the excess of the cost of acquisition over the Group's interest in the fair value of the
identifiable assets and liabilities of a subsidiary company, associated company or jointly controlled entity
at the date of acquisition.
Goodwill on consolidation has been written off against reserve in prior years.
(f) Inventories
Inventories are stated at the lower of cost and net realisable value.
Raw materials comprise the purchase price including duties and other attributable expenses and are
determined using the first-in first-out method. Work-in-progress and finished goods include direct materials,
direct labour, other direct costs and appropriate production overheads and are based on standard cost,
which approximates actual cost.
Net realisable value represents the estimated selling price less estimated costs to completion and costs to
be incurred in marketing, selling and distribution. In arriving at net realisable value, due allowance is
made for all obsolete and slow moving items.
(g) Financial Instruments
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2002 (cont’d)
Financial Instruments are recognised in the balance sheet when the Group has become a party to the
contractual provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified
as a liability, are reported as expense or income. Distributions to holders of financial instruments classified
as equity are charged directly to equity. Financial instruments are offset when the Group has a legally
enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the
liability simultaneously.
(i) Other Non-Current Investment
Non-current investments other than investments in subsidiaries, associates, jointly controlled entities
and investment properties are stated at cost less provision for any permanent diminution in value. Such
provision is made when there is a decline other than temporary in the value of investments and is
recognised as an expense in the period in which the decline occurred.
On disposal of an investment, the difference between net disposal proceeds and its carrying amount
is charged or credited to the income statement.
ANNUAL REPORT 2002 • KIAN JOO CAN FACTORY BERHAD (3186-P)
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