Content2011 - PETRONAS Gas Berhad

Notes to the Financial Statements
31 MarCh 2011
2. Significant Accounting Policies (Continued)
146 petronas gas berhad (101671-h)
2.1 Basis of consolidation (Continued)
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses
applicable to the minority are charged against the Group’s interest except to the extent that the minority has a binding obligation to,
and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is
allocated all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.
2.2 Associate
An associate is an entity in which the Group has significant influence, including representation on the Board of Directors, but not
control or joint control, over the financial and operating policies of the investee company.
An associate is accounted for in the consolidated financial statements of the Group using the equity method less any impairment
losses, unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial
statements include the Group’s share of post-acquisition profits or losses of the equity accounted associate, after adjustments to
align the accounting policies with those of the Group, from the date that significant influence commences until the date that
significant influence ceases.
The Group’s share of post-acquisition reserves and retained profits less losses is added to the carrying value of the investment in the
consolidated statement of financial position. These amounts are taken from the latest audited financial statements and management
financial statements of the associate.
When the Group’s share of post-acquisition losses exceeds its interest in an equity accounted associate, the carrying amount of that
interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the
extent that the Group has an obligation or has made payments on behalf of the associate.
Unrealised profits arising from transactions between the Group and its associate are eliminated to the extent of the Group’s interests
in the associate. Unrealised losses on such transactions are also eliminated partially, unless cost cannot be recovered.
2.3 Jointly controlled entity
The Group has an interest in a joint venture which is a jointly controlled entity. A jointly controlled entity is a contractual arrangement
whereby the Group and other parties undertake an economic activity that is subject to joint control, established by contractual
agreement and requiring unanimous consent for strategic financial and operating decisions. A jointly controlled entity involves the
establishment of a separate entity in which each venturer has an interest.
Investment in the jointly controlled entity is accounted for in the consolidated financial statements using the equity method of
accounting as described in Note 2.2.
2.4 Property, plant and equipment and depreciation
Freehold land and projects-in-progress are stated at cost and are not depreciated. Projects-in-progress is stated at cost less accumulated
impairment losses, if any, and is not depreciated. Other property, plant and equipment are stated at cost or valuation less accumulated
depreciation and accumulated impairment losses.