WILLAS-ARRAY ELECTRONICS (HOLDINGS) LIMITED
80
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
– continued
Investments in associates
– continued
An investment in an associate is accounted for using the equity method from the date on which the
investee becomes an associate. On acquisition of the investment in an associate, any excess of
the cost of the investment over the Group’s share of the net fair value of the identifiable assets and
liabilities of the investee 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 and
liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or
loss in the period in which the investment is acquired.
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 an associate. 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 of disposal) 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.
The Group discontinues the use of the equity method from the date when the investment ceases to
be an associate, or when the investment is classified as held for sale. When the Group retains an
interest in the former associate and the retained interest is a financial asset, the Group measures
the retained interest at fair value at that date and the fair value is regarded as its fair value on
initial recognition in accordance with IAS 39. The difference between the carrying amount of the
associate or joint venture at the date the equity method was discontinued, and the fair value of any
retained interest and any proceeds from disposing of a part interest in the associate is included in
the determination of the gain or loss on disposal of the associate. In addition, the Group accounts
for all amounts previously recognised in other comprehensive income in relation to that associate
on the same basis as would be required if that associate had directly disposed of the related
assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive
income by that associate would be reclassified to profit or loss on the disposal of the related assets
or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification
adjustment) when the equity method is discontinued.
The Group continues to use the equity method when an investment in an associate becomes
an investment in a joint venture or an investment in a joint venture becomes an investment in an
associate. There is no remeasurement to fair value upon such changes in ownership interests.
