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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Property, Plant and Equipment (Cont’d)
The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each
reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates
and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant
and equipment.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
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, being the different between the net
disposal proceeds and the carrying amount, 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 financial statement using the equity method, based
on the financial statements of the associate made up to 31 December 2015. 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 into profit or loss
when the equity method is discontinued.
NOTES TO THE FINANCIAL STATEMENTS
(cont’d)