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Notes to The Financial Statements (cont’d)
2. SUMMARy of SIGNIfICANT ACCoUNTING polICIES (CoNT’D)
2.3 Significant Accounting policies (cont’d)
2.3.9 Associate
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant
influence. An associate is equity accounted for from the date the Group obtains significant influence until
the date the Group ceases to have significant influence over the associate.
The Group’s investment in associate are accounted for using the equity method. Under the equity method,
the investment in associates is measured in the statement of financial position at cost plus post-acquisition
changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in
the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s
identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the
carrying amount of the investment and is instead included as income in the determination of the Group’s
share of associate’s profit or loss for 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, 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 investment in its associates. The Group determines at the end of
each reporting period whether there is any objective evidence that the investment in associate is impaired. If
this is the case, the Group calculates the amount of impairment as the difference between the recoverable
amount of the associate and its carrying value and recognises the amount in profit or loss.
The financial statements of the associates are prepared as of the same reporting period 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 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 profit or loss.
2.3.10 Joint ventures
Joint ventures of the Group take the form of jointly controlled operations. The operation of jointly controlled
operations involves the use of the assets and other resources of the venturers rather than the establishment
of a corporation, partnership or other entity, or a financial structure that is separate from the venturers
themselves. Each venturer uses its own property, plant and equipment and carries its own inventories. It
also incurs its own expenses and liabilities and raises its own finance, which represent its own obligations.
The joint venture activities may be carried out by the venturer’s employees alongside the venturer’s similar
activities. The joint venture agreement usually provides a means by which the revenue from the sale of the
joint product or service and any expenses incurred in common are shared among the venturers.
A venturer shall recognise the assets that it controls and the liabilities that it incurs and the expenses that it
incurs and its share of the income that it earns from the sale of goods or services in its financial statements.
2.3.11 financial Assets
Financial asset are recognised in the statements of financial position when, and only when, the Group and
the Company become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not a fair value through profit or loss, directly attributable transaction costs.
50 MITRAJAYA HOLDINGS BERHAD ANNUAL REPORT 2011