Baker Technology LimitedAnnual Report 2014
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2.
Summary of significant accountingpolicies (cont’d)
2.5
Subsidiaries
A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it is
exposed, orhas rights, tovariable returns from its involvementwith the investeeandhas theability toaffect
those returns through its power over the investee.
In theCompany’s separate financial statements, investments in subsidiaries are accounted for at cost less
any impairment losses.
2.6
Associates
An associate is an entity over which theGroup has the power toparticipate in the financial andoperating
policydecisions of the investeebut does not have control or joint control of thosepolicies.
The Group account for its investments in associates using the equity method from the date on which it
becomes an associate.
Onacquisitionof the investment,anyexcessof thecostof the investmentover theGroup’sshareof thenet fair
valueof the investee’s identifiableassetsand liabilities isaccountedasgoodwill and is included in thecarrying
amount of the investment. Any excess of theGroup’s shareof thenet fair valueof the investee’s identifiable
assetsand liabilitiesover thecost of the investment is includedas income in thedeterminationof theentity’s
shareof theassociateor joint venture’sprofit or loss in theperiod inwhich the investment is acquired.
Under the equitymethod, the investment in associates are carried in the balance sheet at cost plus post-
acquisition changes in theGroup’s shareof net assetsof theassociates. Theprofit or loss reflects the share
of results of the operations of the associates. Distributions received from associates reduce the carrying
amount of the investment.Where therehas been a change recognised inother comprehensive incomeby
theassociates, theGroup recognises its shareof such changes inother comprehensive income. Unrealised
gains and losses resulting from transactionsbetween theGroupandassociateareeliminated to theextent
of the interest in the associates.
When theGroup’s shareof losses inanassociateequalsor exceeds its interest in theassociate, theGroupdoes
not recognise further losses, unless ithas incurredobligationsormadepaymentsonbehalfof theassociate.
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss on the Group’s investment in associate. The Group determines at the end
of each reporting period whether there is any objective evidence that the investment in the associate is
impaired. If this is the case, theGroup calculates the amount of impairment as thedifferencebetween the
recoverable amount of the associate and its carrying value and recognises the amount inprofit or loss.
Thefinancial statementsof theassociatesarepreparedas the same reportingdateas theCompany.Where
necessary, adjustments aremade tobring the accountingpolicies in linewith thoseof theGroup.
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31December 2014
