2. Summary of significant accounting policies (cont’d)
2.9 Joint ventures and associate
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 is
accounted as 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 ventures, 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 associates 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.
In the Company’s separate financial statements, investments in joint ventures and
associates are accounted for at cost less impairment losses.
NOTES TO THE FINANCIAL
STATEMENTS
For the financial year ended 30 June 2015
ASL Marine Holdings Ltd. /Annual Report 2015
82
