NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
61
ANNUAL REPORT 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.8
JOINT VENTURES 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 accounts 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 associates or joint ventures 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.
Net assets of the associates and joint ventures are included in the consolidated financial statements under the equity
method based on their latest audited financial statements. Where their financial periods do not end on 31 December,
management accounts to 31 December are used. Where necessary, adjustments are made to bring the accounting policies
in line with those of the Group.
