Notes to the Financial Statements
(Cont’d)
For the financial year ended 30 April 2016
(In Singapore Dollar)
ANNUAL REPORT 2016
DRIVING IT UP
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2.
Summary of significant accounting policies (cont’d)
2.10
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. A joint venture
is a contractual arrangement whereby two or more parties undertake an economic activity that is subject
to joint control, where the strategic financial and operating decisions relating to the activity require the
unanimous consent of the parties sharing control.
The Group account for its investments in associate 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 associate 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 associate or joint ventures. The
profit or loss reflects the share of results of the operations of the associate or joint ventures. Distributions
received from joint ventures or associate reduce the carrying amount of the investment. Where there has
been a change recognised in other comprehensive income by the associate 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 associate or joint venture.
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 venture. 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 most recent available audited financial statements of the associated companies or joint ventures are
used by the Group in applying the equity method. Where the dates of the audited financial statements
used are not co-terminous with those of the Group, the share of results is arrived at from the last audited
financial statements available and unaudited management financial statements to the end of the
accounting period. Consistent accounting policies are applied for like transactions and events in similar
circumstances.
