FGV Annual Report 2012

24 Felda Global Ventures Holdings Berhad 3 SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Basis of consolidation and investment in subsidiaries (continued) Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated, unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency with the policies adopted by the Group. Non-controlling interests is the equity in a subsidiary not attributable, directly or indirectly, to a parent. On an acquisition-by-acquisition basis, the Group measures any non-controlling interests in the acquiree at the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. At the end of reporting period, non-controlling interests consists of amount calculated on the date of combinations and its share of changes in the subsidiary’s equity since the date of combination. The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets as of the date of disposal including the cumulative amount of any exchange differences or other reserves that relate to the subsidiary and is recognised in profit or loss. All earnings and losses of the subsidiary are attributed to the parent and the non- controlling interests, even if the attribution of losses to the non-controlling interests results in a debit balance in the non-controlling interests. In the Company’s financial statements, investments in subsidiaries are shown at cost. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount (Note 3(g)). On disposal of the subsidiaries, the difference between net disposal proceeds and its carrying amount is charged/credited to profit or loss. (b) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in retained earnings. Gains or losses on disposals to non-controlling interests are also recorded in retained earnings. (c) Goodwill Goodwill represents the excess of the cost of acquisition of subsidiaries, associates and jointly controlled entities over the Group’s share of the fair value of their identifiable net assets including contingent liabilities at the date of acquisition. Goodwill on acquisition in respect of a subsidiary is included in the consolidated statement of financial position as intangible assets, or if arising in respect of an associate or jointly controlled entity, is included in investments in associates or jointly controlled entities. Separately recognised goodwill is tested annually for impairment or if events or circumstances occur indicating that impairment may exist and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill arose. (d) Associates Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but which it does not control generally accompanying a shareholding of between 20% and 50% of voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies. Associates are accounted for in the consolidated financial statements using the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill identified on acquisition. See significant accounting policies Note 3(c) on goodwill. Equity accounting is discontinued when the Group ceases to have significant influence over the entity or when an associate is classified as an asset held for sale. Notes to the Financial Statements for the financial year ended 31 December 2012