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HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2014
NOTES TO THE
FINANCIAL STATEMENTS
for the financial year ended 31 December 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.9 Impairment of non-financial assets (cont’d)
Impairment losses of continuing operations are recognised in profit or loss.
A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognised.
If that is the case, the carrying amount of the asset is increased to its recoverable amount. That
increase cannot exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognised previously. Such reversal is recognised in profit or loss.
2.10 Subsidiaries
A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it is
exposed, or has rights, to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at
cost less impairment losses.
2.11 Associates
An associate is an entity over which the Group has the power to participate in the financial and
operating policy decisions of the investee but does not have control or joint control of those policies.
The Group account for its investments in associates using the equity method from the date on which
it becomes an associate.
On acquisition of the investment, any excess of the cost of the investment over the Group’s share
of the net fair value of the investee’s identifiable assets and liabilities is accounted as goodwill and
is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair
value of the investee’s identifiable assets and liabilities over the cost of the investment is included
as income in the determination of the entity’s share of the associate’s profit or loss in the period in
which the investment is acquired.
Under the equity method, the investment in associates is carried in the balance sheet at cost plus
post-acquisition changes in the Group’s share of net assets of the associates. The profit or loss
reflects the share of results of the operations of the associates. Distributions received from associates
reduce the carrying amount of the investment. Where there has been a change recognised in other
comprehensive income by the associates, the Group recognises its share of such changes in other
comprehensive income. Unrealised gains and losses resulting from transactions between the Group
and associates are eliminated to the extent of the interest in the associates.
