Sample Disclosure – Accounting Policy On Associates (30 May 2009)

Associates

 

Associates are those corporations, partnerships or other business entities in which the Group exercises significant influence, but which it does not control. Significant influence is the power of the Group to participate in the financial and operating policy decisions of its associates but not the power to exercise control over those policies. Such significant influence generally is reflected by a shareholding of between 20% and 50% of the voting rights in these entities, and that is neither a subsidiary nor an interest in a joint venture.  

 

Investments in associates are initially recognised at cost and accounted for in the consolidated financial statements using the equity method of accounting. The Group’s investment in associates includes goodwill on acquisition, net of any accumulated impairment losses. The policy for the recognition and measurement of impairment losses in associates is in accordance with the policy stated in Note X.

 

The audited financial statements of the associates are used by the Group in applying the equity method. In the event that audited financial statements are not available, unaudited financial statements prepared by the mangement of the associates are used. Uniform accounting policies are adopted for similar transactions and events in similar circumstances.

 

Under the equity method, the investment in associate is included in the consolidated balance sheet at cost, adjusted for the Group’s share of post acquisition changes in the net assets of the associate. The Group’s share of the net profit or loss of the associates is recognised in the consolidated income statement, whereas the Group’s share of changes in items recognised directly in the equity of the associate such as reserves and foreign exchage differences, the Group recognises its share of such changes as a component of its equity.

 

In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of Group’s interest in the associates, and the unrealised losses are eliminated to the extent of the costs that can be recovered.

 

When the Group’s share of losses in an associate equals or exceeds its interest in the associates, including any other unsecured receivables, the Group’s interest in this associate is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has legal or constructive obligations over such losses.

 

Associates are equity accounted for in the concolidated financial statements from the date the Group obtain significant influence until the date the Group cease to have significant influence over the associates.

 

Goodwill arises on acquisition of an associate is included in the carrying amount of the investment in the associate and is not amortised. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired. On disposal of such investment, the difference between net disposal proceeds and the carrying amount of the investment in an associate is reflected as a profit or loss on disposal in the consolidated income statement.

Sample Disclosure – Change Of Financial Year End (15 May 2009)

Change of year end

 

The financial year end of the Company was changed from 31 December to 28 February so as to coterminous with the year end of its ultimate holding company as required by section 168 (1) (b) of Companies Act 1965. Accordingly, the current financial statements are prepared for 13 months from 1 January 2008 to 28 February 2009 and as a result, the comparative figures stated in the income statement, statement of changes in equity, cash flow statement and the related notes are not comparable.

Sample Disclosure – Accounting Policy On Plantation Development Expenditure (28 April 2009)

Plantation Development Expenditure

Plantation development expenditure comprises assets held for plantation development activities. These assets include land and buildings used for the purpose of plantation development, infrastructure costs such as roads and bridges attached on the plantation estates, cost of planting and development of crops.

This is stated at cost less accumulated depreciation and impairment losses, if any. Freehold land is stated at cost and is not depreciated.

Depreciation is calculated on the straight-line method to write off the cost over their estimated useful lives. The principal annual rates of depreciation are:

Freehold buildings                               2%

Leasehold buildings                             over the lease period

Bridges and roads                                5%

Mature plantations                               25 years

Cost of preparation of agriculture land, planting, replanting and upkeep of crops, together with other incidental costs are capitalised as immature plantations and transferred to mature plantations account when the trees have matured and meet the criteria for commercial production.

Mature plantations are amortised over the estimated productive life of the trees estimated to be 25 years. The period of the plantations’ yield was determined by vegetative growth calculated and estimated by the management.

Replanting expenditure is expensed to the income statement immediately in the year in which the expenditure is incurred.

Sample Disclosure – Financial Instruments (19 February 2009)

Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Other Non-Current Investments                

Other non-current investments (other than investments in subsidiaries, associates and investment properties) are stated at cost less allowance for diminution in value. Cost is determined on the weighted average basis while market value is determined based on quoted market values. On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is recognised in the income statement.

Trade Receivables

Trade receivables are recognised and stated at original invoiced amounts and carried at anticipated realizable values. Bad debts are written off when it is established that they are irrecoverable. Specific allowance is made for known doubtful debts. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, balances and deposits with licensed financial institutions and fixed income trust funds that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, net of outstanding bank overdraft.

Trade Payables

Trade payables are stated at cost which approximates the fair value of the consideration to be paid in the future for goods and services rendered.

Interest-Bearing Borrowings

Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of plant and equipment are capitalized as part of the cost of those assets, until such time as the assets are ready for their intended use. All other borrowing costs are charged to the income statement as an expense in the period in which they are incurred.

Equity Instruments

Ordinary shares are classified as equity. Dividends payable on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction, other than in the context of a business combination, are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. Cost of issuing equity securities in connection with a business combination is included in the cost of acquisition. When the share capital of the Company is repurchased, the consideration paid, including any attributable transaction costs, is presented as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the income statement on the sale, re-issuance or cancellation of treasury shares. Consideration received is presented in the financial statements as a change in equity.

Derivative Financial Instruments

The Group uses derivative financial instruments in the form of forward exchange contracts to hedge its exposure to foreign exchange arising from operating, financing and investing activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. Derivative financial instruments are not recognised in the financial statements on inception. The underlying foreign currency assets or liabilities are translated at their respective hedged exchange rates and all exchange gains or losses are recognised as income or expense in the income statement in the same period as the exchange differences on the underlying hedged items. Exchange gains and losses arising on contracts entered into as hedges of anticipated future transactions are deferred until the date of such transaction, at which time they are included in the measurement of such transactions.

Sample Disclosure – Note On Property Development Costs (13 February 2009)

PROPERTY DEVELOPMENT COSTS


2008

RM

2007

RM

Land – at cost

x,xxx,xxx

x,xxx,xxx

Add : Incidental costs

xxx,xxx

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Cumulative land cost recognised as an expense in income

Statement

(x,xxx,xxx)

(x,xxx,xxx)

x,xxx,xxx

x,xxx,xxx

Add : Development costs
Balance at beginning of year

x,xxx,xxx

x,xxx,xxx

Additions during the financial year

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Less: Cumulative development costs recognised as an

expense in income statement

(x,xxx,xxx)

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Less: Transfer to closing inventories (Note x)

(x,xxx,xxx)

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Included in development cost is the interest charged as follows:

2008

RM

2007

RM

Balance at beginning of year

x,xxx,xxx

x,xxx,xxx

Amount included in additions during the year

xxx,xxx

xxx,xxx

Balance at end of year

x,xxx,xxx

x,xxx,xxx

Sample Disclosure – Change Of Financial Year End (8 January 2009)

 

The Company changed its financial year end from 31 March to 30 June annually with effect from the current financial period ended 30 June 2008.

The financial statements for the current financial period are made up from 1 March 2007 to 30 June 2008.