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2.
Summary of significant accounting policies (cont’d.)
2.4 Basis of consolidation (cont’d.)
2.4.4 Associates (cont’d.)
Profits and losses resulting from upstream and downstream transactions between the Group and its associates are
recognised in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates.
Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted
by the Group.
Dilution gains and losses arising in investments in associates are recognised in profit or loss.
2.4.5 Reverse acquisition of an asset or a group of assets that does not constitute a business
At the time of reverse acquisition, the Group considers whether each reverse acquisition represents the reverse
acquisition of a business or the reverse acquisition of an asset. Where the assets acquired and liabilities assumed do not
constitute a business as defined under MFRS 3, the transaction is accounted as an asset acquisition.
In such cases, the Group identifies and recognises the individual identifiable assets acquired (including intangible assets)
and liabilities assumed. The cost of acquisition is allocated to the individual identifiable assets and liabilities based upon
their relative fair value at the date of purchase, and no goodwill or deferred tax is recognised.
The legal subsidiary is regarded as the accounting acquirer while the legal parent is regarded as the accounting
acquiree. The accounting acquirer is deemed to have issued equity shares as purchase consideration for the assets and
liabilities of the accounting acquiree using the accounting principles of MFRS 2. The fair value of issued equity shares is
determined based on the market value of the accounting acquiree which is represented by the quoted and trade price of
its shares right before the reverse acquisition. The difference between the purchase consideration and the fair value of
identifiable assets acquired and liabilities assumed will be recognised in the income statement as acquisition cost arising
from the reverse acquisition.
2.5 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The
cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly
attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended
by management. Costs also include borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset (refer to accounting policy Note 2.20 on borrowing costs).
Where significant parts of an item of property, plant and equipment are required to be replaced at intervals, the Group
recognises such parts in the carrying amount of the property, plant and equipment as a replacement when it is probable that
future economic benefits associated with the parts will flow to the Group and the cost of the parts can be measured reliably.
The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as expenses in
profit or loss during the financial period in which they are incurred.
Significant parts of an item of property, plant and equipment are depreciated separately over their estimated useful lives in
accordance with the principle in MFRS 116 ‘Property, Plant and Equipment’. Depreciation is calculated using the straight-line
method to write-off the cost of the assets to their residual values over their estimated useful lives.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
[ ]
AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS
254