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Notes to the
financial statements
For the financial year ended 31 December 2018
81
A N N U A L R E P O R T
2 0 1 8
2.
Summary of significant accounting policies (cont’d)
2.7
Subsidiaries
A subsidiary is an investee that is controlled by the Group. The Group controls an investee when
it is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at
cost less any impairment losses.
2.8
Joint venture and associates
An associate is an entity over which the Group has the power to participate in the financial and
operating policy decisions of the investee but does not have control or joint control of those policies.
The Group account for its investments in associates and joint ventures using the equity method
from the date on which it becomes an associate or joint venture.
On acquisition of the investment, any excess of the cost of the investment over the Group’s share
of the net fair value of the investee’s identifiable assets and liabilities represents goodwill and is
included in the carrying amount of the investment. Any excess of the Group’s share of the net fair
value of the investee’s identifiable assets and liabilities over the cost of the investment is included
as income in the determination of the entity’s share of the associate or joint venture’s profit or loss
in the period in which the investment is acquired.
Under the equity method, the investment in associates or joint ventures are carried in the balance
sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates or
joint ventures. The profit or loss reflects the share of results of the operations of the associates or
joint ventures. Distributions received from joint ventures or associates reduce the carrying amount
of the investment. Where there has been a change recognised in other comprehensive income by the
associates or joint venture, the Group recognises its share of such changes in other comprehensive
income. Unrealised gains and losses resulting from transactions between the Group and associate
or joint venture are eliminated to the extent of the interest in the associates or joint ventures.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in
the associate or joint venture, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate or joint venture.
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 or joint ventures. The Group
determines at the end of each reporting period whether there is any objective evidence that the
investment in the associate or joint venture is impaired. If this is the case, the Group calculates the
amount of impairment as the difference between the recoverable amount of the associate or joint
venture and its carrying value and recognises the amount in profit or loss.
The financial statements of the associates and joint ventures are prepared as the same reporting
date as the Company. Where necessary, adjustments are made to bring the accounting policies in
line with those of the Group.