Frontken Berhad Annual Report 2016

Frontken Corporation Berhad (651020-T)

ANNUAL REPORT

2016

SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to

the end of the reporting period.

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 of 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

an 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) Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the

consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred

and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the

fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs,

other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred.

In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to

fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling

interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition.

The choice of measurement basis is made on a transaction-by-transaction basis.

(b) Non-Controlling Interests

Non-controlling interests are presented within equity in the consolidated statement of financial position, separately

from the equity attributable to owners of the Company. Profit or loss and each component of other comprehensive

income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive

income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit

balance.

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted

for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted

and the fair value of consideration paid or received is recognised directly in equity of the Group.

(d) Loss of Control

Upon the loss of control of a subsidiary, the Group recognises any gain or loss on disposal in profit or loss which

is calculated as the difference between:-

(i)

the aggregate of the fair value of the consideration received and the fair value of any retained interest in the

former subsidiary; and

(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any

non-controlling interests.

Notes To The Financial Statements

(cont’d)