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V. FINANCIAL STATEMENTS

114 | S P SETIA BERHAD GROUP | Annual Report 2014

notes to the

financial statements

For The Year Ended

31 October 2014

1. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial statements comply with applicable approved Financial Reporting Standards (“FRSs”) issued by the Malaysian

Accounting Standards Board (“MASB”) and with the provisions of the Companies Act, 1965.

The measurement bases applied in the preparation of the financial statements include cost, recoverable value, realisable value and

fair value. Estimates are used in measuring these values.

The financial statements of the Group and of the Company are presented in Ringgit Malaysia (“RM”), which is also the Company’s

functional currency. Unless otherwise indicated, the amounts in these financial statements have been rounded to the nearest

thousand (RM’000).

(b) Changes in accounting policies

The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except for

the adoption of the following new/revised FRSs and Amendments to FRSs:

FRS 10

Consolidated Financial Statements

FRS 11

Joint Arrangements

FRS 12

Disclosures of Interests in Other Entities

FRS 13

Fair Value Measurement

FRS 119

Employee Benefits (revised)

FRS 127

Separate Financial Statements

FRS 128

Investments in Associates and Joint Ventures

Amendments to FRSs

Annual Improvements to FRSs (2012)

Amendments to FRS 7

Disclosures – Offsetting Financial Assets and Financial Liabilities

Amendments to FRS 10, FRS 11 and FRS 12

Consolidated Financial Statements, Joint Arrangements and Disclosure of

Interests in Other Entities: Transition Guidance

The adoption of the above new/revised FRSs and Amendments to FRSs does not have any material impact on the financial

statements of the Group and the Company, except for the following:

FRS 10, Consolidated Financial Statements

FRS 10, Consolidated Financial Statements introduces a new single control model to determining which investees should be

consolidated. FRS 10 supersedes FRS 127, Consolidated and Separate Financial Statements and IC Interpretation 112, Consolidation

– Special Purpose Entities. There are three elements to the definition of control in FRS 10:- (i) power by investor over an investee, (ii)

exposure, or rights, to variable returns from investor’s involvement with the investee, and (iii) investor’s ability to affect those returns

through its power over the investee. All three of these criteria must be met for an investor to have control over an investee.

FRS 11, Joint Arrangements

FRS 11, Joint Arrangements establishes the principles for classification and accounting for joints arrangements and supersedes FRS

131, Interests in Joint Ventures. Under FRS 11, a joint arrangement may be classified as joint venture or joint operation. Interest

in joint venture will be accounted for using the equity method whilst interest in joint operation will be accounted for using the

applicable FRSs relating to the underlying assets, liabilities, income and expense from the joint operations.