p 167 MISC BERHAD - Annual Report 2014 2. Significant accounting policies (cont’d.) 2.3 Summary of significant accounting policies (cont’d.) (c) Joint arrangements (cont’d.) (i) Joint ventures Investment in joint ventures is accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in joint ventures is carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the Group’s share of net assets of the joint ventures. The Group’s share of the net profit or loss of the joint ventures is recognised in the income statement. Where there has been a change recognised directly in the equity of the joint ventures, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the joint ventures. The Group determines at each reporting date whether there is any objective evidence that the investment in the joint ventures is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognises the amount in the income statement. The joint ventures are equity accounted for from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint ventures. Goodwill relating to a joint venture is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the joint ventures’ identifiable assets, liabilities and contingent liabilities over the cost of the investments 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 joint ventures’ profit or loss in the year in which the investments are acquired. When the Group’s share of losses in joint ventures equals or exceeds its interest in the joint ventures, including any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
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