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Annual Report 2014 | S P SETIA BERHAD GROUP | 121

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(f) Basis of consolidation (cont’d)

The excess of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the

acquisition date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is

recorded as goodwill. Goodwill is stated at cost less accumulated impairment losses. Any excess of the Group’s share in the net

fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is

recognised as income in profit or loss on the date of acquisition.

Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests

which are not owned directly or indirectly by the shareholders of the Company. They are shown separately in the consolidated

statement of comprehensive income, statement of changes in equity and statement of financial position. Total comprehensive

income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the

non-controlling interests having a deficit balance.

When a change in the Company’s ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and

liabilities of the subsidiary including any goodwill are derecognised. Amounts recognised in other comprehensive income in respect

of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific standard.

Any retained interest in the entity is remeasured at fair value.The difference between the carrying amount of the retained investment

at the date when control is lost and its fair value is recognised in profit or loss.

Changes in the Company’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 Group. 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 in retained earnings within equity attributable

to the shareholders of the Company.

(g) Investments in associates and jointly controlled entities

An associated company is an entity in which the Group has significant influence and that is neither a subsidiary company nor an

interest in a joint arrangement. Significant influence is the power to participate in the financial and operating policy decisions of the

investee, but is not control or joint control over those policies. The existence and effect of potential voting rights that are currently

exercisable or convertible are considered when assessing whether the Group has significant influence.

A jointly controlled entity is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the

net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only

when decisions about the relevant activities require unanimous consent of the parties sharing control.

In the Company’s separate financial statements, investments in associated companies and jointly controlled entities are stated at

cost less impairment losses. Impairment losses are recognised in profit or loss.

On disposal, the difference between the net disposal proceeds and the carrying amount of the associated companies and the jointly

controlled entities are included in profit or loss.

Investments in associated companies and jointly controlled entities are accounted for in the consolidated financial statements

by the equity method of accounting. Under the equity method, the investments in associated companies and jointly controlled

entities are initially recognised at cost and adjusted thereafter for post-acquisition changes in the Group’s share of net assets of the

associated companies and jointly controlled entities.

The Group’s share of net profits or losses and changes recognised directly in the equity of the associated companies or jointly

controlled entities are recognised in the consolidated profit or loss and consolidated statement of changes in equity, respectively.