Amtel Holdings Berhad - Company Announcements - Bursa Malaysia

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NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(c) Subsidiary Companies (Cont’d)
Dividend declared by subsidiary companies out of pre-acquisition profits are treated as a return of part of
the Company’s investments in the subsidiary companies. Such dividends are not accounted for as income
in the financial statements of the Company but instead be applied against the investment account to record
a reduction in the cost of investment.
(d) Associated Companies
An associated company is a company in which the Group has significant influence and which is neither a
subsidiary company nor a joint venture. Significant influence is the power to participate in the financial
and operating policy decisions of the investee but has no control over those policies.
Investments in associated companies are stated at cost less accumulated impairment losses, if any, in the
Company’s financial statements.
The consolidated income statement includes the Group’s share of the associated companies' profits less
losses based on the audited financial statements of the associated companies after adjustments for
depreciation of depreciable assets stated at fair values to the Group and amortisation or write down of
goodwill or reserve on acquisition of the associated companies. The share of losses of associated
companies are limited to the carrying value of the investment determined on an individual basis.
In the consolidated balance sheet, the Group’s interest in associated companies is stated at cost plus the
Group’s share of post acquisition reserve of the associated companies after adjustments for depreciation
of depreciable assets stated at fair values to the Group and amortisation or write down of goodwill or
reserve on acquisition of the associated companies.
(e) Amortisation of Goodwill and Reserve on Consolidation
Goodwill or reserve on consolidation arising from acquisition of subsidiary companies and associated
companies is amortised through the income statement over a period of 3 to 25 years or the expected useful
life, whichever is the shorter, upon commencement of operation. Goodwill on consolidation is written
down when there is an impairment in their carrying value.
(f) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses, if any.
No amortisation is provided on freehold land. Depreciation is calculated on the straight line basis to write
off the cost of the other property, plant and equipment over their estimated useful lives.
The principal annual rates used for this purpose are:-
Leasehold land and buildings Over lease period of 52 years, 55 years and 99 years
Apartment and freehold buildings 2%
Plant and machinery, factory
equipment and tools 10% - 33.33%
Renovation, furniture, fixture,
fittings, office equipment and
electrical installation 10% - 33.33%
Motor vehicles 20%
(g) Impairment of Assets
The carrying amounts of assets other than inventories, financial assets and tax assets are reviewed at each
balance sheet date to determine whether there is any indication of impairment. If such an indication exists,
the asset's recoverable amount is estimated. The recoverable amount is the higher of net selling price and
the value in use, which is measured by reference to discounted future cash flows. An impairment loss is
recognised whenever the carrying amount of an item of assets exceeds its recoverable amount.
Amtel Holdings Berhad 2003 annual report