67
FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT 2014
NOTES TO THE
FINANCIAL STATEMENTS
(cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Property, Plant and Equipment (Cont’d)
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when the cost is incurred and it is probable that the future economic benefits associated with the asset
will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that
are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are
recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing
the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset
is acquired, if applicable
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use. Any gain or loss arising from derecognition of the asset is recognised in profit or
loss.
Investments in Subsidiaries
Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are
reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate
that the carrying values may not be recoverable. The cost of the investments includes transaction costs.
On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the
carrying amount of the investments is recognised in profit or loss.
Investments in Associates
An associate is an entity in which the Group has a long-term equity interest and where it exercises significant
influence over the financial and operating policies.
The investment in an associate is accounted for in the consolidated statement of financial position using
the equity method, based on the financial statements of the associate made up to 31 December 2014. The
Group’s share of the post-acquisition profits and other comprehensive income of the associate is included in
the consolidated statement of comprehensive income after adjustment if any, to align the accounting policies
with those of the Group, from the date that significant influence commences up to the effective date on which
significant influence ceases or when the investment is classified as held for sale. The Group’s interest in the
associate is carried in the consolidated statement of financial position at cost plus the Group’s share of the
post-acquisition retained profits and reserves. The cost of investment includes transaction costs.
When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest
is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group
has an obligation.
Unrealised gains on transactions between the Group and the associate are eliminated to the extent of the
Group’s interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered.
When the Group ceases to have significant influence over an associate and the retained interest in the former
associate is a financial asset, the Group measures the retained interest at fair value at that date and the fair value
is regarded as the initial carrying amount of the financial asset in accordance with MFRS 139. Furthermore,
the Group also reclassifies its share of the gain or loss previously recognised in other comprehensive income
of that associate to profit or loss when the equity method is discontinued. However, the Group will continue to
use the equity method if the dilution does not result in a loss of significant influence or when an investment in
a joint venture becomes an investment in an associate. Under such changes in ownership interest, the retained
investment is not remeasured to fair value but a proportionate share of the amounts previously recognised
in other comprehensive income of the associate will be reclassified to profit or loss where appropriate. All
dilution gains or losses arising in investments in associates are recognised in profit or loss.
