Eng - IOI Group

notestothefinancialstatements cont’d3 SIGNIFICANT ACCOUNTING POLICIES cont’d3.1 Basis of AccountingThe financial statements of the Group and of the Company have been prepared under the historical costconvention (as modified for the revaluation of investment properties), unless otherwise indicated in thesignificant accounting policies.3.2 Basis of ConsolidationThe consolidated financial statements incorporate the financial statements of the Company and all itssubsidiaries made up to the end of the financial year. All subsidiaries’ financial statements are consolidatedbased on the acquisition method of accounting. Under the acquisition method of accounting, the results ofthe subsidiaries acquired or disposed during the financial year are included in the consolidated incomestatement from the date of acquisition or up to the date of disposal.At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values arereflected in the consolidated financial statement. The difference between the fair value of purchase considerationand the Group’s share of the fair value of the separable net assets of the subsidiaries at the date of acquisition isretained in the consolidated balance sheet either as goodwill or reserve on consolidation, as appropriate. The Groupamortises goodwill or reserve on consolidation over a period of not exceeding 20 years.The total profits and losses of subsidiaries are included in the consolidated income statement, the proportionof the profit or loss applicable to minority shareholders is deducted in arriving at the profit attributable tothe shareholders of the Company.The total assets and liabilities of the subsidiaries are included in the consolidated balance sheet and theinterests of minority shareholders in the net assets are stated separately. Minority interest is measured at theminorities’ share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree.Investments in associates are accounted for in the consolidated financial statements using the equity method ofaccounting based on the latest financial statements of the associates concerned. Under the equity method ofaccounting, the Group’s share of profits less losses of the associates is included in the consolidated incomestatement. The Group’s interest in associates is stated at cost plus the Group’s share of their post acquisition resultsand reserves less amortisation of goodwill or discount on acquisition, if any, in the consolidated balance sheet.IOI Corporation BerhadAnnual Report 2003138In line with the Group’s policy on amortisation of goodwill or reserve on consolidation, the Group amortisesgoodwill or discount on acquisition of associates over a period of not exceeding 20 years.All significant intragroup transactions, balances and unrealised gains or losses are eliminated on consolidation.