Directors - Boustead Holdings Berhad

Accounting Policies
(c) ASSOCIATES
80
An Associate is defined as a company, not being a Subsidiary or an interest in a joint venture, in which
the Group has a long term equity interest of not less than 20% and in whose financial and operating
decisions the Group exercises significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but not in control or joint control over those
policies. Details of Associates are given on page 143.
Investments in Associates are accounted for in the consolidated financial statements using the equity
method of accounting. Under the equity method, the investment in an Associate is carried in the
consolidated balance sheet at cost plus post acquisition changes in the Group’s share of net assets of
the Associate, less distributions received and less any impairment in value of individual investments. The
consolidated income statement reflects the Group’s share of the Associate’s results after tax. Where there
has been a change recognised directly in the equity of an Associate, the Group recognises its share of
such changes. Unrealised gains or losses on transactions between the Group and its Associates are
eliminated to the extent of the Group’s interest in the Associates. When the Group’s share of losses
exceeds its interest in an Associate, the Group does not recognise further losses except to the extent
that the Group has incurred legal or constructive obligations or made payments on behalf of the
Associate.
After application of the equity method, the Group determines whether it is necessary to recognise any
additional impairment loss with respect to the Group’s net investment in an Associate. Associates are
equity accounted from the date the Group obtains significant influence until the date the Group ceases
to have significant influence.
Any goodwill arising on the acquisition of an Associate, representing the excess of the cost of the
investment compared to the Group’s share of the net fair value of the Associate’s identifiable assets,
liabilities and contingent liabilities, is included in the carrying amount of the Associate and is not
amortised. To the extent that the net fair value of the Associate’s identifiable assets, liabilities and
contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the
Group’s share of the Associate’s profit or loss in the period in which the investment is acquired.
The most recent available financial statements of Associates are used by the Group in applying the
equity method. Where the dates of the audited financial statements used are not coterminous with those
of the Group, the share of results is arrived at from the last audited financial statements available and
management financial statements to the end of the accounting period. Where necessary, adjustments are
made to bring the accounting policies used into line with those of the Group.
(d) INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
In the Company’s separate financial statements, investments in Subsidiaries and Associates are stated
at cost less impairment losses, if any. On disposal of such investments, the difference between net
disposal proceeds and their carrying amounts is charged or credited to profit or loss.