notes to the financial statements
for the financial year ended 31 December 2014 (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.5 Associates (continued)
For incremental interest in an associate, the date of acquisition is the purchase date at each stage and goodwill is calculated at each purchase date based on
the fair value of assets and liabilities identified. There is no “step up to fair value” of net assets of the previously acquired stake and the share of profits and
equity movements for the previously acquired stake is recorded directly through equity.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See
accounting policy 2.15 on impairment of non-financial assets.
On disposal, the difference between the net disposal proceeds and the net carrying amount of the associate disposed is taken to the profit or loss.
In the Company’s separate financial statements, investment in associates is stated at cost less impairment loss.
2.6 Joint arrangements
A joint arrangement is an arrangement of which there is contractually agreed sharing of control by the Group with one or more parties where the strategic
financial and operating decisions relating to the entities require unanimous consent of the parties sharing control. The classification of a joint arrangement as
a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement. A joint venture is a joint arrangement whereby the
joint venturers have rights to the net assets of the arrangement. A joint operation is a joint arrangement whereby the joint operators have rights to the assets
and obligations for the liabilities, relating to the arrangement.
The Group has interests in joint venture, which are accounted for in the consolidated financial statements using the equity method of accounting. Equity
accounting involves recognising the Group’s share of the post-acquisition profit or loss and other comprehensive income within consolidated profit or loss and
other comprehensive income respectively. The cumulative post-acquisition movements are adjusted against the cost of investment and include goodwill on
acquisition (net of accumulated impairment loss).
The Group recognises the portions of gains or losses on the sale of assets by the Group to the joint venture that is attributable to other venturers. The Group does
not recognise its share of profits or losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the
assets to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable
value of assets or an impairment loss.
Where necessary, adjustments have been made to the financial statements of joint ventures to ensure consistency of accounting policies with those of the
Group.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See
accounting policy 2.15 on impairment of non-financial assets.
On disposal, the difference between the net disposal proceeds and the carrying amount of the joint venture disposed is included in the profit or loss.
In the Company’s separate financial statements, investment in joint ventures is stated at cost less impairment loss.
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Wah Seong Corporation Berhad • Annual Report 2014
