120 | CapitaLand Limited Annual Report 2014
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)
2.2 Basis of consolidation
(cont’d)
(c) Associates and joint ventures
Associates are those entities in which the Group has signimcant innuence, but not control, over their mnancial
and operating policies of these entities. Signimcant innuence is presumed to exist when the Group holds
20% or more of the voting power of another entity. Joint ventures are entities over whose activities the Group
has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its
assets and obligations for its liabilities.
Associates and joint ventures are accounted for using the equity method (collectively referred to as equity-
accounted investees) and are recognised initially at cost. The cost of the investments includes transaction
costs. The Group’s investments in equity-accounted investees include goodwill identimed on acquisition, net of
any accumulated impairment losses. Subsequent to initial recognition, the consolidated mnancial statements
include the Group’s share of the promt or loss and other comprehensive income of the equity-accounted
investees, after adjustments to align the accounting policies of the equity-accounted investees with those of
the Group, from the date that signimcant innuence or joint control commences until the date that signimcant
innuence or joint control ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount
of the investment, together with any long-term interests that form part thereof, is reduced to zero and the
recognition of further losses is discontinued except to the extent that the Group has an obligation to fund
the investee’s operation or has made payments on behalf of the investee.
(d) Joint operations
A joint operation is an arrangement in which the Group has joint control whereby the Group has rights to the
assets, and obligations for the liabilities, relating to an arrangement. The Group accounts for each of its assets,
liabilities and transactions, including its share of those held or incurred jointly, in relation to the joint operation.
(e) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated mnancial statements. Unrealised gains arising
from transactions with equity-accounted investees are eliminated against the investment to the extent of
the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
(f) Accounting for subsidiaries, associates and joint ventures by the Company
Investments in subsidiaries, associates and joint ventures are stated in the Company’s balance sheet at cost
less accumulated impairment losses.
