| ANNUAL REPORT 2015
108
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
4.7 Investments (cont’d)
(b) Associates
An associate is an entity over which the Group and the Company have significant influence and that is neither a
subsidiary nor an interest in a joint arrangement. Significant influence is the power to participate in the financial
and operating policy decisions of the investee but is neither control nor joint control over those policies.
In the separate financial statements of the Company, an investment in associate is stated at cost less impairment
losses.
An investment in associate is accounted for in the consolidated financial statements using the equity method of
accounting. The investment in associate in the consolidated statement of financial position is initially recognised
at cost and adjusted thereafter for the post acquisition change in the share of net assets of the investments of the
Group.
The interest in an associate is the carrying amount of the investment in the associate under the equity method
together with any long term interest that, in substance, form part of the net investment in the associate of the
Group.
The share of the profit or loss of the associate by the Group during the financial year is included in the consolidated
financial statements, 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. Distributions received from
the associate reduce the carrying amount of the investment. Adjustments to the carrying amount could also be
necessary for changes in the proportionate interest of the Group in the associate arising from changes in the
associate’s equity that have not been recognised in the associate’s profit or loss. Such changes include those arising
from the revaluation of property, plant and equipment and from foreign exchange translation differences. The
share of those changes by the Group is recognised directly in equity of the Group.
Unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of
the interest of the Group in the associate to the extent that there is no impairment.
When the share of losses of the Group in the associate equals to or exceeds its interest in the associate, the carrying
amount of that interest is reduced to nil and the Group does not recognise further losses unless it has incurred legal
or constructive obligations or made payments on its behalf.
The most recent available financial statements of the associate are used by the Group in applying the equity
method. When the end of the reporting periods of the financial statements are not coterminous, the share of results
is arrived at using the latest audited financial statements for which the difference in end of the reporting periods is
no more than three (3) months. Adjustments are made for the effects of any significant transactions or events that
occur between the intervening periods.
When the Group ceases to have significant influence over an associate, any retained interest in the former associate
at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial
carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds
from the interest disposed of and the carrying amount of the investment at the date when equity method is
discontinued is recognised in the profit or loss.
When the interest of the Group in an associate decreases but does not result in a loss of significant influence, any
retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or
loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately
to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the
related assets or liabilities.
