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120 | S P SETIA BERHAD GROUP | Annual Report 2014

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(e) Subsidiary companies

In the Company’s separate financial statements, investment in subsidiary companies are stated at cost less impairment losses.

Impairment losses are charged to profit or loss.

On disposal, the difference between the net disposal proceeds and the carrying amount of the subsidiary company disposed off is

taken to profit or loss.

(f) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and of all its subsidiary companies

made up to the end of the financial year. The consolidated financial statements are prepared using uniform accounting policies for

like transactions in similar circumstances.

The Group controls an investee if and only if the Group has all the followings:

(i) power over the entity;

(ii) exposure, or rights, to variable returns from its involvement with the entity; and

(iii) the ability to use its power over the entity to affect the amount of the investor’s returns.

Potential voting rights are considered when assessing control only if the rights are substantive. The Group reassesses whether it

controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control.

All intra-group balances, transactions, income and expenses are eliminated in full on consolidation and the consolidated financial

statements reflect external transactions only.

All subsidiary companies are consolidated on the acquisition method of accounting from the date of acquisition, being the date

on which the Group obtains control, and continue to be consolidated until the date that such control ceases except for Syarikat

Kemajuan Jerai Sdn Bhd and Wawasan Indera Sdn Bhd which are acquired under common control.

For business combinations under common control are accounted using the pooling of interests method, where the results of

entities or businesses under common control are accounted for as if the acquisition had occurred at the date that common control

was established. The assets and liabilities acquired are included in the consolidated statements of financial position at their existing

carrying amounts.

Under the acquisition method of accounting, the cost of an acquisition is measured as the aggregate of the fair values of the assets

acquired, liabilities incurred or assumed and equity instruments issued at the date of exchange. Identifiable assets acquired and

liabilities and contingent liabilities assumed are measured at their fair values at the acquisition date.

The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities

incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent

consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.

Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,

measured initially at their fair values at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition

either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.