Positioning for the Future | 115
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)
2.1 Basis of preparation
(cont’d)
Note 22
– measurement of share-based payments
Note 32
– determination of fair value of assets, liabilities and contingent liabilities acquired
in business combinations
Note 34
– determination of fair value of mnancial instruments.
(a) Changes in accounting policies
(i) Subsidiaries
From 1 January 2014, as a result of the adoption of FRS 110 Consolidated Financial Statements, the Group
has changed its accounting policy for determining whether it has control over and consequently whether it
consolidates its investees. Control exists when the Group is exposed, 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.
In the previous mnancial years, control exists when the Group has the ability to exercise its power to
govern the mnancial and operating policies of an entity so as to obtain benemts from its activities.
The Group assessed that it controls CapitaCommercial Trust (CCT), CapitaMalls Malaysia Trust (CMMT)
and Ascott Residence Trust (ART), although the Group owns less than half of the ownership interest
and voting power of CCT, CMMT and ART. The activities of CCT, CMMT and ART are managed by the
Group’s wholly-owned subsidiaries, namely, CapitaCommercial Trust Management Limited, CapitaMalls
Malaysia REIT Management Sdn Bhd and Ascott Residence Trust Management Limited respectively
(REIT Managers). REIT Managers have decision-making authority over CCT, CMMT and ART, subject to
oversight by the trustee of the respective REITs. The Group’s overall exposure to variable returns, both
from the REIT Managers’ remuneration and their interests in the REITs, is signimcant and any decisions
made by the REIT Managers affect the Group’s overall exposure. Accordingly, the Group concluded that
it has control over these investees and consolidated these entities, which were previously accounted
for as associates using the equity method.
The Group applied the acquisition accounting to these investments since acquisition dates, and restated
the relevant amounts as if these investees had been consolidated from that date. The quantitative impact
of the change is set out in note 2.1(a)(vi).
(ii) Joint Arrangements
FRS 111 Joint Arrangements establishes the principles for classimcation and accounting of joint
arrangements. Under this standard, interests in joint ventures will be accounted for using the equity
method whilst interests in joint operations will be accounted for using the applicable FRSs relating to
the underlying assets, liabilities, revenue and expense items arising from the joint operations. As the
Group is currently applying the equity method of accounting for its joint ventures, there is no impact to
the Group’s promt or net assets.
(iii) Disclosure of interests in other entities
FRS 112 Disclosure of Interests in Other Entities sets out the disclosures required to be made in respect
of all forms of an entity’s interests in other entities, including subsidiaries, joint arrangements, associates
and unconsolidated structured entities. The adoption of this standard would result in more extensive
disclosures being made in the Group’s mnancial statements in respect of its interests in other entities.
From 1 January 2014, as a result of FRS 112, the Group has expanded its disclosures about its interests
in subsidiaries (note 6), associates (note 7) and joint ventures (note 8).
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From 1 January 2014, as a result of the Amendments to FRS 36 Impairment of Assets – Recoverable
Amount Disclosures for Non-Financial Assets, the Group has expanded its disclosures of recoverable
amounts when they are based on fair value less costs of disposals (note 4).
