2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.12 Investments in associates An associate is an entity over which the Group has significant influence, being the power to participate in the financial and operating policy decisions of the entity but is not control or of joint control of those policies, and generally accompanying a shareholding of 20% or more of the voting power. On acquisition of the associate, any excess of the cost of the investment over the Group’s share of the net fair value of the associate 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 associate identifiable assets and liabilities over the cost of the investment is included as income in the determination of the Group’s share of the associate’s profit or loss in the reporting period in which the investment is acquired. Investments in associates are carried at cost less any impairment loss that has been recognised in profit or loss in the Company’s separate financial statements. The results and assets and liabilities of the associate are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held-for-sale, in which case it is accounted for under SFRS(I) 5 from the date on which the investees become classified as held for sale. Under the equity method, investments in associates are carried at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment loss of individual investments. The Group’s share of losses in an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. Distributions received from the associate reduce the carrying amount of the investment. Any goodwill arising on the acquisition of the Group’s interest in an associate is accounted for in accordance with the Group’s accounting policy for goodwill arising on such acquisitions (see above). Unrealised profits and losses are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are also eliminated in the same way as unrealised gains, but only to the extent that there is no impairment. The Company has accounted for its investments in associates at cost less any accumulated impairment in its separate financial statements 2.13 Interests in joint arrangements Investments in joint ventures A joint arrangement is a contractual arrangement whereby two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. A joint arrangement is classified either as a joint operation or a joint venture, based on the rights and obligations of the parties to the arrangement. To the extent the joint arrangement provides the Group with rights to the assets and obligations for the liabilities relating to the arrangement, the arrangement is a joint operation. To the extent the joint arrangement provides the Group with rights to the net assets of the arrangement, the arrangement is a joint venture. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only decisions about the relevant activities require unanimous consent of the parties sharing control. On acquisition of the investment in a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the joint venture’s identifiable assets and liabilities is accounted for as goodwill and is included in the carrying amount of the investment. Any excess of the Group’s net fair value of the joint venture’s identifiable assets and liabilities over the cost of the investment is included as income in the determination of the Group’s share of the joint venture’s profit or loss in the reporting period in which the investment is acquired. 74 KEONG HONG HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
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