(B) BASIS OF CONSOLIDATION (CONT’D.) Business combinations under common control Business combinations involving entities under common control are accounted for by applying the pooling of interest method which involves the following: – The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. – No adjustments are made to reflect the fair values at the date of combination, or recognise any new assets or liabilities. – No additional goodwill is recognised as a result of the combination. – Any differences between the consideration paid/transferred and the equity ‘acquired’ is reflected within the equity as merger reserve. The Group has elected no restatement of financial information in the consolidated financial statements for the periods prior to the combination of entities under common control. Investment in subsidiaries – separate financial statements In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any impairment losses. Dividends received from subsidiaries are recorded as a component of revenue in the Company’s separate income statement. (C) ASSOCIATES An associate is defined as a company, not being a subsidiary or an interest in a joint venture, in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies. Details of the associate are as disclosed in Note 16. On acquisition of an associate, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised 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 identifiable assets and liabilities of the investee over the cost of 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 associate’s profit or loss for the period in which the investment is acquired. The Group’s interest in associate is equity accounted. Under the equity method, investment in associate is carried in the consolidated statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate, less distribution received and any impairment in value of individual investment. Any change in other comprehensive income (OCI) of these investees is presented as part of the Group’s OCI. The consolidated statement of comprehensive income reflects the share of the associate’s results after tax. Where there has been a change recognised directly in the equity of associate, the Group recognises its share of such change. Unrealised gains or losses on transactions between the Group and its associate are eliminated to the extent of the Group’s interest in the associate. When the Group’s share of losses exceeds its interest in associate, the Group does not recognise further losses except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. ACCOUNTING POLICIES Boustead Plantations Berhad 200
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