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Notes to the financial statements
31 December 2014
Bursa Malaysia
•
Annual Report 2014
102
2. Significant accounting policies (cont’d.)
2.3 Standards issued but not yet effective (cont’d.)
(b) MFRS 9
Financial Instruments
(cont’d.)
This Standard will come into effect on or after 1 January 2018 with early adoption permitted. Retrospective application is required, but comparative
information is not compulsory. The Group and the Company are currently assessing the impact of the adoption of this Standard in relation to the new
requirements for classification and measurement and impairment, but the requirements for hedge accounting is not relevant to the Group and the
Company.
2.4 Summary of significant accounting policies
(a) Subsidiaries and basis of consolidation
(i) Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less accumulated impairment losses. On
disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in profit or loss.
(ii) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the financial year end. The
financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same financial year
end as the Company. Consistent accounting policies are applied to transactions and events in similar circumstances.
Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Acquisition of subsidiaries are accounted for using the purchase method except for business combinations arising from common control transfers.
Business combinations involving entities under common control are accounted for by applying the pooling of interest method. The assets and
liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling
holding company. Any difference between the consideration paid and the share capital of the “acquired” entity is reflected within equity as
merger reserve or merger deficit. Merger deficit is adjusted against suitable reserves of the entity acquired to the extent that laws or statutes do
not prohibit the use of such reserves.
The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes
place. Comparatives are presented as if the entities have always been combined since the date the entities had come under common control.
Under the purchase method of accounting, identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the date of acquisition. Adjustments to those fair values relating to previously held interests are treated
as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair
values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly
attributable to the business combination.