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Datasonic Group Berhad
(Company No. 809759-X)
79
NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 March 2016
(Continued)
3.
BASIS OF PREPARATION (CONT’D)
3.1 BASIS OF ACCOUNTING (CONT’D)
(b) MFRS 16 sets out the principles for the recognition, measurement, presentation and
disclosure of leases and will replace the current guidance on lease accounting when it
becomes effective. Under MFRS 16, the classification of leases as either finance leases or
operating leases is eliminated for lessees. All lessees are required to recognise their leased
assets and the related lease obligations in the statement of financial position (with limited
exceptions). The leased assets are subject to depreciation and the interest on lease
liabilities are calculated using the effective interest method. The Group anticipates that
the application of MFRS 16 in the future may have a material impact on the amounts
reported and disclosures made in the financial statements. However, it is not practicable
to provide a reasonable estimate of the financial impacts of MFRS 16 until the Group
performs a detailed review.
3.2 BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of the Company and
its subsidiaries made up to the end of the financial year.
Subsidiaries are entities (including structured entities, if any) controlled by the Group. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over
the entity. Potential voting rights are considered when assessing control only when such rights
are substantive. The Group also considers it has de facto power over an investee when, despite
not having the majority of voting rights, it has the current ability to direct the activities if the
investee that significantly affect the investee’s return.
Subsidiaries are consolidated from the date on which control is transferred to the Group up to
the effective date on which control ceases, as appropriate.
Intragroup transactions, balances, income and expenses are eliminated on consolidation.
Intragroup losses may indicate impairment that requires recognition in the consolidated financial
statements. Where necessary, adjustments are made to the financial statements of subsidiaries
to ensure consistency of accounting policies with those of the Group.
(a) Merger Accounting for Common Control Business Combinations
Acquisitions which result in a business combination involving common control entities,
are outside the scope of MFRS 3. Accordingly, merger accounting has been used by the
Group to account for such common control business combinations.
A business combination involving entities under common control is a business combination
in which all the combining entities or subsidiaries are ultimately controlled by the same
party and parties both before and after the business combination, and that control is not
transitory.
Subsidiaries acquired which have met the criteria for pooling of interest are accounted
for using merger accounting principles. Under the merger method of accounting, the
results of the subsidiaries are presented as if the merger had been effected throughout
the financial year.