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122 | 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)

(g) Investments in associates and jointly controlled entities (cont’d)

An investment in an associated company or a jointly controlled entity is accounted for using the equity method from the date on

which the Group obtains significant influence or joint control until the date the Group ceases to have a significant influence or joint

control over the associated company or jointly controlled entity.

Premium relating to an associated company or a jointly controlled entity is included in the carrying value of the investment and it is

not tested for impairment separately. Instead, the entire carrying amount of the investment is tested for impairment in accordance

with the accounting policy set out in 1(q)(iii) below.

Discount on acquisition 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 or jointly controlled entities’ profit or loss in the period in which the investment is

acquired.

Unrealised gains on transactions between the Group and its associated companies or jointly controlled entities are eliminated to the

extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides

evidence of impairment of the asset transferred.

Equity accounting is discontinued when the carrying amount of the investment in an associated company or a jointly controlled

entity diminishes by virtue of losses to zero, unless the Group has incurred legal or constructive obligations or made payments on

behalf of the associated company.

The results and reserves of associated companies or jointly controlled entities are accounted for in the consolidated financial

statements based on audited and/or unaudited management financial statements made up to the end of the financial year and

prepared using accounting policies that conform to those used by the Group for like transactions in similar circumstances.

When changes in the Group’s interests in an associated company do not result in a loss of significant influence, the retained

interests in the associated company are not remeasured. Any gain or loss arising from the changes in the Group’s interests in the

associated company is recognised in profit or loss.

When the Group ceases to have significant influence over an associated company, any retained interest in the former associated

company is recognised at fair value on the date when significant influence is lost. Any gain or loss arising from the loss of significant

influence over an associated company is recognised in profit or loss.

(h) Property, plant and equipment

(i) Measurement basis

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.

The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of an asset.

Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated with

the asset will flow to the Group and to the Company and the cost of the asset can be measured reliably. The carrying amount

of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial year in

which they are incurred.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from their

use or disposal. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit

or loss.