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Gamuda Berhad (29579-T) • Annual Report 2012
2.
Summary of significant accounting policies (cont’d.)
2.6 Subsidiaries
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so
as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group has such power over another
entity.
In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment
losses.
2.7 Associated companies
Associated companies are entities, not being a subsidiary or a joint venture, in which the Group has significant
influence. An associated company is equity accounted for from the date the Group obtains significant influence
until the date the Group ceases to have significant influence over the associate.
The Group’s investments in associated companies are accounted for using the equity method. Under the
equity method, the investment in associates is measured in the statement of financial position at cost plus
post-acquisition changes in the Group’s share of net assets of the associated companies. Goodwill relating
to associated company is included in the carrying amount of the investment. Any excess of the Group’s share
of the net fair value of the associated company’s identifiable assets, liabilities and contingent liabilities over
the cost of the investment is excluded from the carrying amount of the investment and is instead included as
income in the determination of the Group’s share of the associated company’s profit or loss for the period in
which the investment is acquired.
When the Group’s share of losses in an associated company equals or exceeds its interest in the associated
company, the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associate.
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 its associated companies. The Group determines at each reporting
date whether there is any objective evidence that the investment in the associated company is impaired. If this
is the case, the Group calculates the amount of impairment as the difference between the recoverable amount
of the associated company and its carrying value and recognises the amount in profit or loss.
The financial statements of the associated companies are prepared as of 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 associated companies are stated at cost less
impairment losses. on disposal of such investments, the difference between net disposal proceeds and their
carrying amounts is included in profit or loss.
NoTES To ThE FINANCIAL STATEMENTS
31 July 2012