cover rationale - ChartNexus

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Associates (continued)
Investment in associates are accounted for in the consolidated financial statements using
the equity method of accounting. Equity accounting involves recognising in the income
statement the Group’s share of the results of associates for the period. The Group’s
investments in associates are carried in the balance sheet at an amount that reflects its
share of the net assets of the associates and includes goodwill on acquisition. Equity
accounting is discontinued when the carrying amount of the investment in an associate
reaches zero, unless the Group has incurred obligations or guaranteed obligations in
respect of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to
the extent of the Group’s interest in the associates; unrealised losses are also eliminated
unless the transaction provides evidence on impairment of the asset transferred. Where
necessary, in applying the equity method, adjustments are made to the financial
statements of associates to ensure consistency of accounting policies with the Group.
(e) Jointly controlled entities
Jointly controlled entities are corporations, partnership or other entities over which there
is a contractually agreed sharing of control by the Group with one or more parties over
the financial and operating policy decisions.
With the adoption of Malaysian Accounting Standards Board (‘MASB’) Standard 16
‘Financial Reporting of Interest in Joint Venture’, results and interests in jointly controlled
entities are equity accounted in the consolidated financial statements of the Group.
Unrealised gains on transactions between the Group and its jointly controlled entities are
eliminated to the extent of the Group’s interest in the jointly controlled entities;
unrealised losses are also eliminated unless the transaction provides evidence on
impairment of the asset transferred. Where necessary, in applying the equity method,
adjustments have been made to the financial statements of jointly controlled entities to
ensure consistency of accounting policies with those of the Group.
(f) Foreign currencies
The Group’s foreign entities are those operations that are not an integral part of the
operations of the Company. Income statements of foreign entities are translated into
Ringgit Malaysia at average exchange rates for the financial year and the balance sheets
are translated at exchange rates ruling at the balance sheet date. Exchange differences
arising from the retranslation of the net investment in foreign entities are taken to
‘Currency translation difference’ in shareholders’ equity. On disposal of the foreign entity,
such translation differences are recognised in the income statement as part of the gain
or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the Group and translated at the exchange rate ruling
at the date of the transaction.
Financial statements of foreign operations that are integral to the operations of the
Company are translated using procedures in the following paragraph as if the
transactions of the foreign operations had been those of the Company.
Laporan Tahunan 2002 Annual Report
NOTES TO THE FINANCIAL STATEMENTS 31 AUGUST 2002 (CONTINUED)
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