FRENCKEN GROUP LIMITED
ANNUAL REPORT 2015
56
NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(b) Group accounting (Cont’d)
Transactions with non-controlling interests
Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control over the subsidiary
are accounted for as transactions with equity owners of the Company. Any difference between the change in
the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is
recognised within equity attributable to the equity holders of the Company.
Associated companies
Associated companies are entities over which the Group has significant influence, but not control, generally
accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments
in associated companies are accounted for in the consolidated financial statements using the equity method of
accounting less impairment losses, if any.
(i)
Acquisitions
Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured
at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the
date of exchange, plus costs directly attributable to the acquisition. Goodwill on associated companies
represents the excess of the cost of acquisition of the associate over the Group’s share of the fair value
of the identifiable net assets of the associate and is included in the carrying amount of the investments.
(ii) Equity method of accounting
In applying the equity method of accounting, the Group’s share of its associated companies’ post-
acquisition profits or losses are recognised in the income statement and its share of post-acquisition other
comprehensive income is recognised in other comprehensive income. These post-acquisition movements
and distributions received from the associated companies are adjusted against the carrying amount of the
investments. When the Group’s share of losses in an associated company equals to or exceeds its interest
in the associated company, including any other unsecured non-current receivables, the Group does
not recognise further losses, unless it has obligations to make or has made payments on behalf of the
associated company. Unrealised gains on transactions between the Group and its associated companies
are eliminated to the extent of the Group’s interest in the associated companies. Unrealised losses are
also eliminated unless the transactions provide evidence of impairment of the assets transferred. The
accounting policies of associated companies have been changed where necessary to ensure consistency
with the accounting policies adopted by the Group.
(iii) Disposals
Investments in associated companies are derecognised when the Group loses significant influence.
Any retained equity interest in the entity is remeasured at its fair value. The difference between the
carrying amount of the retained interest at the date when significant influence is lost and its fair value is
recognised in income statement. Gains and losses arising from partial disposals or dilutions in investments
in associated companies in which significant influence is retained are recognised in income statement.
Please refer to Note 2(c) the accounting policy on investments in associated companies in the separate
financial statements of the Company.
