BAKERTECHNOLOGYLIMITED
ANNUALREPORT2013
87
Notes to the
Financial Statements
for the financial year ended 31December 2013
2.
Summaryof significantaccounting policies (cont’d)
2.6
Associates
Anassociate is anentity, not beinga subsidiaryor a joint venture, inwhich theGrouphas significant influence. Theassociate is
equity accounted for from thedate theGroupobtains significant influenceuntil thedate theGroup ceases tohave significant
influence over the associate.
The Group’s investments in associates are accounted for using the equitymethod. Under the equitymethod, the investment
in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the
associate. Goodwill relating to associates is included in the carrying amount of the investment and is neither amortised nor
tested individually for impairment. Any excess of the Group’s share of the net fair value of the associate’s identifiable asset,
liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group’s
share of profit or loss of the associate in the period inwhich the investment is acquired.
The profit or loss reflects the share of the results of operations of the associates.Where there has been a change recognised
in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive
income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the
extent of the interest in the associates.
TheGroup’s shareof theprofit or lossof its associates is theprofit attributable toequityholdersof theassociates and therefore
is the profit after tax and non-controlling interests in the subsidiaries of associates.
When theGroup’s share of losses in an associate equals or exceeds its interest in the associate, theGroup does not recognise
further losses, unless it has incurredobligations ormade payments on behalf of the associate.
After application of the equitymethod, 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 each balance sheet date whether there is any
objective evidence that the investment in the 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 the profit or loss.
Thefinancial statements of the associate areprepared as of the same reportingdate as theCompany unless it is impracticable
to do so. When the financial statements of an associate used in applying the equity method are prepared as of a different
reportingdate from that of theCompany, adjustments aremade for the effects of significant transactions or events that occur
between the sale and the reporting date of the Company. Where necessary, adjustments aremade to bring the accounting
policies in linewith those of theGroup.
Upon loss of significant influence over the associate, the Groupmeasures and recognises any retained investment at its fair
value. Any differencebetween the carrying amount of the associateupon loss of significant influence and the fair valueof the
aggregate of the retained investment and proceeds fromdisposal is recognised in profit or loss.
