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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.5 Leases and hire purchase (continued)
(b) Operating leases
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
incidental to ownership.
Lease payments under operating leases are recognised as an expense on a straight-line basis over
the lease term.
(c) Leases of land and buildings
For leases of land and buildings, the land and buildings elements are considered separately for the
purpose of lease classification and these leases are classified as operating or finance leases in the
same way as leases of other assets.
The minimum lease payments including any lump-sum upfront payments made to acquire the
interest in the land and buildings are allocated between the land and the buildings elements
in proportion to the relative fair values of the leasehold interests in the land element and the
buildings element of the lease at the inception of the lease.
For a lease of land and buildings in which the amount that would initially be recognised for the
land element is immaterial, the land and buildings are treated as a single unit for the purpose of
lease classification and is accordingly classified as a finance or operating lease. In such a case,
the economic life of the buildings is regarded as the economic life of the entire leased asset.
4.6 Investments
(a) Subsidiaries
A subsidiary is an entity in which the Group and the Company are exposed, or have rights, to
variable returns from its involvement with the subsidiary and have the ability to affect those returns
through its power over the subsidiary.
An investment in subsidiary, which is eliminated on consolidation, is stated in the separate
financial statements of the Company at cost. Put options written over non-controlling interests
on the acquisition of subsidiary shall be included as part of the cost of investment in the separate
financial statements of the Company. Subsequent changes in the fair value of the written put
options over non-controlling interests shall be recognised in profit or loss. Investments accounted
for at cost shall be accounted for in accordance with MFRS 5
Non-current Assets Held for Sale and
Discontinued Operations
when they are classified as held for sale (or included in a disposal group
that is classified as held for sale) in accordance with MFRS 5.
When control of a subsidiary is lost as a result of a transaction, event or other circumstance,
the Group would derecognise all assets, liabilities and non-controlling interests at their carrying
amount and to recognise the fair value of the consideration received. Any retained interest in the
former subsidiary is recognised at its fair value at the date control is lost. The resulting difference is
recognised as a gain or loss in profit or loss.