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60 WILLAS-ARRAY ELECTRONICS (HOLDINGS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
INVESTMENTS IN JOINT VENTURES
Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest
are referred to as jointly controlled entities.
The results and assets and liabilities of jointly controlled entities are incorporated in the consolidated financial
statements using the equity method of accounting.
Under the equity method, investments in jointly controlled entities are initially recognised in the consolidated statement
of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other
comprehensive income of the jointly controlled entities. When the Group’s share of losses of a jointly controlled entity
equals or exceeds its interest in that jointly controlled entity (which includes any long-term interests that, in substance,
form part of the Group’s net investment in the jointly controlled entity), the Group discontinues recognising its share
of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of that jointly controlled entity.
The financial information of jointly controlled entities used for equity accounting purposes are prepared using uniform
accounting policies as those of the Group for like transactions and events in similar circumstances.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities
and contingent liabilities of a jointly controlled entity recognised at the date of acquisition is recognised as goodwill,
which is included within the carrying amount of the investment.
Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over
the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with
respect to the Group’s investment in a jointly controlled entity. When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single
asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying
amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that
impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment
subsequently increases.