Asus 2015 Annual Report Download - page 246

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(13) Investments accounted for under equity method
A. Subsidiaries are all entities (including structured entity) controlled by the Company. The
Company controls an entity when the Company is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those returns through its power
over the entity.
B. Unrealized gains on transactions between the Company and its subsidiaries are eliminated to
the extent of the Company’s interest in the subsidiaries. Accounting policies of subsidiaries
have been adjusted where necessary to ensure consistency with the policies adopted by the
Company.
C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognized in
profit or loss, and its share of post-acqusition movements in other comprehensive income is
recognized in other comprehensive income. When the Company’s share of losses in a
subsidiary equals or exceeds its interest in the subsidiary, the Company should continue to
recognize losses in proportion to its ownership.
D. Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing
control of the subsidiary (transaction with non-controlling interests) are accounted for as equity
transactions, i.e. transactions with owners in their capacity as owners. Any difference between
the amount by which the non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognized directly in equity.
E. When the Company loses control of a subsidiary, the Company remeasures any investment
retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on
initial recognition of a financial asset or the cost on initial recognition of the associate or joint
venture. Any difference between fair value and carrying amount is recognized in profit or loss.
All amounts previously recognized in other comprehensive income in relation to the subsidiary
are reclassified to profit or loss, on the same basis as would be required if all the related assets
or liabilities were disposed of. That is, other comprehensive income in relation to the subsidiary
should be reclassified to profit or loss.
F. Associates are all entities over which the Company has significant influence but not control. In
general, it is presumed that the investor has significant influence, if an investor holds, directly
or indirectly 20% or more of the voting power of the investee. Investments in associates are
accounted for under equity method and are initially recognized at cost.
G. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit
or loss, and its share of post-acquisition movements in other comprehensive income is
recognized in other comprehensive income. When the Company’s share of losses in an
associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Company does not recognize further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the associate.
H. When changes in an associate’s equity are not recognized in profit or loss or other
comprehensive income of the associate and such changes do not affect the Company’s
ownership percentage of the associate, the Company recognizes change in ownership interests
in the associate in “capital surplus” in proportion to its ownership.