TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
50
Notes to the financial statements
For the financial year ended 31 March 2016
2.
Summary of significant accounting policies (cont’d)
2.6
Foreign currency (cont’d)
(b)
Consolidated financial statements
For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of
exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates
prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in
other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income
relating to that particular foreign operation is recognised in profit or loss.
2.7
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.
2.8
Associates and joint ventures
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 and joint ventures using the equity method from the date on which
it becomes an associate or joint venture.
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 or joint
venture’s profit or loss in the period in which the investment is acquired.
Under the equity method, the investment in associates or joint ventures are carried in the balance sheet at cost plus
post-acquisition changes in the Group’s share of net assets of the associates or joint ventures. The profit or loss reflects
the share of results of the operations of the associates or joint ventures. Distributions received from joint ventures
or associates reduce the carrying amount of the investment. Where there has been a change recognised in other
comprehensive income by the associates or joint venture, the Group recognises its share of such changes in other
comprehensive income. Unrealised gains and losses resulting from transactions between the Group and associate or
joint venture are eliminated to the extent of the interest in the associates or joint ventures.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint
venture, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of
the associate or joint venture.
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 or joint ventures. The Group determines at the end of each
reporting period whether there is any objective evidence that the investment in the associate or joint venture is impaired.
If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate or joint venture and its carrying value and recognises the amount in profit or loss.
The financial statements of the associates and joint ventures 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.
