continued - The Lion Group

3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of Consolidation (continued)
(ii) Investment in Associates
Associates are entities in which the Group has significant influence and that is neither a subsidiary
nor an interest in a joint venture. 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.
Investment in associates are accounted for in the consolidated financial statements using the equity
method of accounting. Under the equity method, the investment in associates is carried in the
consolidated balance sheet at cost adjusted for post-acquisition changes in the Group’s share of net
assets of the associates. The Group’s share of the net profit or loss of the associates is recognised in
the consolidated income statement. Where there has been a change recognised directly in the equity
of the associates, the Group recognises its share of such changes.
In applying the equity method, unrealised gains and losses on transactions between the Group and
the associates are eliminated to the extent of the Group’s interest in the associates. 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 the associates. The associates are
equity accounted for from the date the Group obtains significant influence until the date the Group
ceases to have significant influence over the associates.
Goodwill relating to associates is included in the carrying amount of the investment and is not
amortised. Any excess of the Group’s share of the net fair value of the associates’ identifiable assets,
liabilities and contingent liabilities over the cost of the investment is excluded from the carrying
amount of the investment and instead included as income in the determination of the Group’s share
of the associates’ profit or loss in the period in which the investment is acquired.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any long-term interests that, in substance, form part of the Group’s net investment in the
associate, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associate.
The most recent available audited financial statements of the associates are used by the Group
in applying the equity method. Where the dates of the audited financial statements used are not
conterminous 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.
Uniform accounting policies are adopted for like transactions and events in similar circumstances.
In the Company’s separate financial 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 the income statement.
When an associate holds an ownership interest in the Group, any profit or loss and any increment or
decrement of net assets of the Group which the associate has accounted for in its financial statements,
would be disregarded when the Group applies the equity method to account for its investment in the
associate.
44