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NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2013
81 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.12 Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits
from its activities.
In the Company's separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
2.13 Associates
An associate is an entity, not being a subsidiary or joint venture, in which the Group has significant influence. The Group's
investment in associates are accounted for using the equity method. An associate is equity accounted for from the date the Group
obtains significant influence until the Group ceases to have significant influence over the associate.
Under the equity method, the investment in associates is carried in the balance sheet at cost plus post-acquisition changes in
the Group’s share of net assets of the associates. Goodwill relating to the associate is included in the carrying amount of the
investment and is neither amortised nor individually tested for impairment. Any excess of the Group’s share of the net fair value
of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is included as income in
the determination of the Group’s share of results of the associate in the period the investment is acquired.
The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised in
other comprehensive income by the associates, the Group recognizes its share of such changes in other comprehensive income.
Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the
interest in the associate.
The Group’s share of the profit or loss of its associates is the profit attributable to equity holders of the associate and, therefore
is the profit or loss after tax and non-controlling interest in the subsidiaries of associates.
When the Group’s share of losses of an associate equals or exceeds its interest in the associate, the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on
the Group’s investment in its associate. The Group determines at the end of each reporting period whether there is any objective
evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as
the difference between the recoverable amount of the associate and its carrying value and recognises the amount in investment
in profit or loss.
The financial statements of the associate are prepared for the same reporting period as the Company. Where necessary, adjustments
are made to bring the accounting policies in line with those of the Group.
Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value.
Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the aggregate
of the retained investment and proceeds from disposal is recognised in profit or loss.