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FINANCIAL REPORTS
118
Bursa Malaysia •
Annual Report 2015
NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2015
2. Significant accounting policies (cont’d.)
2.3 Standards issued but not yet effective (cont’d.)
(b) MFRS 9 Financial Instruments (cont’d.)
MFRS 9
Financial Instruments
also requires impairment assessments to be based on an expected loss model, replacing the MFRS 139
incurred loss model. Finally, MFRS 9
Financial Instruments
aligns hedge accounting more closely with risk management, establishes a more
principle-based approach to hedge accounting and addresses inconsistencies and weaknesses in the previous model.
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 expect to complete the assessment of the effect of these Standards and plan to adopt these Standards with effect
from 1 January 2016.
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 like transactions and events of similar
circumstances.
Subsidiaries are consolidated from the date on which control exists. 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.