Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

Notes to the Financial Statements
For the fi nancial year ended 31 December 2011
2. Summary of signifi cant accounting policies (contd.)
2.13 Associates (contd.)
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group
does not recognise further losses, unless it has incurred obligations or made payments on behalf of the
associate.
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss on the Group’s investments in its associates. The Group determines at each
reporting date whether there is any objective evidence that the investments in associates are impaired. If
this is the case, the Group calculates the amount of impairment as the difference between the recoverable
amount of the associates and their carrying value and recognises the amount in profi t or loss.
The fi nancial statements of the associates are prepared as of the same reporting date as the Company.
Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
In the Company’s separate fi nancial statements, investments in associates are stated at cost less impairment
losses. On disposal of such investments, the difference between net disposal proceeds and their carrying
amounts is included in profi t or loss.
2.14 Joint venture
The Group has interests in joint ventures which are jointly controlled entities. A joint venture is a contractual
arrangement whereby two or more parties undertake an economic activity that is subject to joint control,
where the strategic fi nancial and operating decisions relating to the activity require the unanimous consent
of the parties sharing control. A jointly controlled entity is a joint venture that involves the establishment of
a separate entity in which each venturer has an interest.
Investments in jointly controlled entities are accounted for in the consolidated fi nancial statements using
the equity method of accounting as described in Note 2.13.
The fi nancial statements of the joint ventures are prepared as of the same reporting date as the Company.
Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
In the Company’s separate fi nancial statements, its investments in joint ventures are stated at cost less
impairment losses. On disposal of such investments, the difference between the net disposal proceeds
and the carrying amount is included in profi t or loss.
2.15 Impairment of non-fi nancial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired.
If any such indication exists, or when an annual impairment assessment for an asset is required, the Group
makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifi able cash fl ows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash fl ows expected to be generated by the asset are
discounted to their present value using a pre-tax discount rate that refl ects current market assessments of
the time value of money and the risks specifi c to the asset. Where the carrying amount of an asset exceeds
its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised
in respect of a CGU or groups of CGUs are allocated fi rst to reduce the carrying amount of any goodwill
allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the
unit or groups of units on a pro-rata basis.
Annual Report 2011 91