MKH Annual Report 2018

108 MKH Berhad Annual Report 2018 3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (c) Investment in Associates (Cont’d) The Group discontinues the use of the equity method from the date when investment ceases to be an associate, or when the investment is classified as held for sale. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with FRS 139. The di erence between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets and liabilities. Therefore, if a gain or a loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued. When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. When a group entity transacts with its associate of the Group, profits or losses resulting from the transactions with the associate are recognised in the Group’s consolidated financial statements only to the extent of the Group’s interest in the associate that are not related to the Group. (d) Foreign currency (i) Foreign currency transactions In preparing the financial statements of the individual entities, transactions in currencies other than the Group entities’ functional currency (foreign currencies) are recorded in the Group entities’ functional currency at the exchange rates prevailing at the date of the transaction. Monetary items denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Non-monetary items denominated in foreign currencies are not retranslated at the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Exchange di erences arising on the settlement of monetary items and on the translation of monetary items are included in profit or loss for the period except for exchange di erences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange di erences arising on monetary items that form part of the Group’s net investment in foreign operations are recognised in profit or loss in the Company’s separate financial statements or the individual financial statements of the foreign operation, as appropriate. Exchange di erences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the di erences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange di erences arising from such non-monetary items are also recognised directly in equity. FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2018 NOTES TO THE FINANCIAL STATEMENTS