Ocean Sky International Limited - Ocean Sky International Ltd ...

3. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The financial statements of the Group have been prepared in accordance with the Statements of
Accounting Standard (“SAS”) issued by the Institute of Certified Public Accountants of Singapore
and the applicable disclosure requirements of the Singapore Companies Act, Chapter 50.
Basis of preparation of financial statements
The financial statements of the Group, expressed in Singapore dollars, have been prepared in
accordance with the historical cost convention.
Basis of consolidation
The consolidated financial statements include the financial statements of the Group made up to the
end of the respective financial years.
The financial statements of the subsidiary companies are included in the consolidated financial
statements from the dates of acquisitions of the subsidiary companies concerned. All intercompany
transactions have been eliminated on consolidation and the consolidated financial
statements reflect external transactions only.
In the case of the subsidiary, Suntex Investments Co. Ltd (Cambodia), which was acquired in the
financial year ended 31 December 2000 and subsequently disposed off in the six months financial
period ended 30 June 2002, Suntex Investments Co. Ltd (Cambodia) was deconsolidated in the
two financial years ended 31 December 2001 for the purpose of presentation of the consolidated
financial statements to reflect the companies that are in the Group as at 30 June 2002 and the
adjustments arising from the deconsolidation are disclosed in the Statements of Adjustments.
Goodwill arising on acquisition represents the excess of the cost of investment in subsidiaries over
the fair value of the identifiable net assets acquired. Negative goodwill arising on acquisition
represents the excess of the fair value of the identifiable net assets acquired over the cost of
acquisition. With effect from 1 January 2001, the Group has adopted SAS 22 Business
Combination (2000) and amortise goodwill over a period of up to 20 years. Both negative goodwill
and goodwill on acquisition arising prior to 1 January 2001 have been credited or charged in full to
the retained profits brought forward; such goodwill have not been retrospectively capitalised and
amortised, as allowed under SAS 22 Business Combination (2000).
Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation. The cost of an asset comprises its
purchase price and any direct attributable costs of bringing the asset to working condition for its
intended use. Expenditure for additions, improvements and renewals are capitalised and
expenditure for maintenance and repairs are charged to the profit and loss accounts. When fixed
assets are sold or retired, their cost and accumulated depreciation are removed from the financial
statements and any gain or loss resulting from their disposal is included in the profit and loss
accounts.
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