89
COSCO Corporation (Singapore) Limited
Annual Report 2015
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
Financial Statements
2.
Significant accounting policies
(continued)
2.3 Group accounting
(continued)
(c)
Associated companies
Associated companies are entities over which the Group has significant influence, but not control,
generally accompanied by a shareholding giving rise to voting rights of 20% and above but not
exceeding 50%.
Investments in associated companies are accounted for in the consolidated financial statements
using the equity method of accounting less impairment losses, if any.
(i)
Acquisitions
Investments in associated companies are initially recognised at cost. The cost of an
acquisition is measured at the fair value of the assets given, equity instruments issued
or liabilities incurred or assumed at the date of exchange, plus costs directly attributable
to the acquisition. Goodwill on associated companies represents the excess of the cost
of acquisition of the associated company over the Group’s share of the fair value of the
identifiable net assets of the associated company and is included in the carrying amount of
the investments.
(ii)
Equity method of accounting
In applying the equity method of accounting, the Group’s share of its associated
companies’ post-acquisition profits or losses are recognised in profit or loss and its share
of post-acquisition other comprehensive income is recognised in other comprehensive
income. These post-acquisition movements and distributions received from the associated
companies are adjusted against the carrying amount of the investments. When the
Group’s share of losses in an associated company equals to or exceeds its interest in
the associated company, the Group does not recognise further losses, unless it has legal
or constructive obligations to make, or has made, payments on behalf of the associated
company. If the associated company subsequently reports profits, the Group resumes
recognising its share of those profits only after its share of the profits equals the share of
losses not recognised.
Unrealised gains on transactions between the Group and its associated companies are
eliminated to the extent of the Group’s interest in the associated companies. Unrealised
losses are also eliminated unless the transactions provide evidence of impairment of the
assets transferred. The accounting policies of associated companies are changed where
necessary to ensure consistency with the accounting policies adopted by the Group.
(iii)
Disposals
Investments in associated companies are derecognised when the Group loses significant
influence. If the retained equity interest in the former associated company is a financial
asset, the retained equity interest is measured at fair value. The difference between the
carrying amount of the retained interest at the date when significant influence is lost, and its
fair value and any proceeds on partial disposal, is recognised in profit or loss.
Please refer to Note 2.9 “Investments in subsidiaries and associated companies” for the
accounting policy on investments in associated companies in the separate financial
statements of the Company.
