2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.11 Associates (continued)
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.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the
Group does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise
an additional impairment loss on the Group’s investment in associate. The Group determines at
the end of each reporting period whether there is any objective evidence that the investment in
the associate is impaired. If this is the case, the Group calculates the amount of impairment as the
difference between the recoverable amount of the associate and its carrying value and recognises
the amount in profit or loss.
The financial statements of the associates are prepared as the same reporting date as the Company.
Where necessary, adjustments are made to bring the accounting policies in line with those of the
Group.
2.12 Financial instruments
(a)
Financial assets
Initial recognition and measurement
Financial assets are recognised when, and only when, the Group becomes a party to the
contractual provisions of the financial instrument. The Group determines the classification of
its financial assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the
case of financial assets not at fair value through profit or loss, directly attributable transaction
costs.
62
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2015
