HTC 2013 Annual Report Download - page 96

FINANCIAL INFORMATION FINANCIAL INFORMATION
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When the Company's share of losses of a subsidiary
equals or exceeds its interest in that subsidiary (which
includes any carrying amount of the investment in
subsidiary accounted for by the equity method and
long-term interests that, in substance, form part of
the Company's net investment in the subsidiary), the
Company continues recognizing its share of further
losses.
The acquisition cost in excess of the acquisition-date
fair value of the identifiable net assets acquired is
recognized as goodwill. Goodwill is not amortized.
The acquisition-date fair value of the net identifiable
assets acquired in excess of the acquisition cost is
recognized immediately in profit or loss.
When the Company ceases to have control over a
subsidiary, any retained investment is measured at
fair value at that date and the difference between the
previous carrying amount of the subsidiary attributable
to the retained interest and its fair value is included in
the determination of the gain or loss. Furthermore,
the Company accounts for all amounts previously
recognized in other comprehensive income in relation
to that subsidiary on the same basis as would be
required if the Company had directly disposed of the
related assets or liabilities.
Profits and losses from downstream transactions with
a subsidiary are eliminated in full. Profits and losses
from upstream with a subsidiary and sidestream
transactions between subsidiaries are recognized in
the Company's financial statements only to the extent
of interests in the subsidiary that are not related to the
Company.
Jointly Controlled Entities
Joint venture arrangements that involve the
establishment of a separate entity in which ventures
have joint control over the economic activity of the
entity are referred to as jointly controlled entities.
The results and assets and liabilities of jointly controlled
entities are incorporated in these parent company
Any excess of the cost of acquisition over the
Company's share of the net fair value of the identifiable
assets, liabilities and contingent liabilities of an jointly
controlled entity recognized at the date of acquisition
is recognized as goodwill, which is included within
the carrying amount of the investment and is not
amortized. Any excess of the Company's share of the
net fair value of the identifiable assets, liabilities and
contingent liabilities over the cost of acquisition, after
reassessment, is recognized immediately in profit or
loss.
When necessary, the entire carrying amount of
the investment (including goodwill) is tested for
impairment as a single asset by comparing its
recoverable amount with its carrying amount. Any
impairment loss recognized forms part of the carrying
amount of the investment. Any reversal of that
impairment loss is recognized to the extent that the
recoverable amount of the investment subsequently
increases.
The Company discontinues the use of the equity
method from the date on which it ceases to have
significant influence over the jointly controlled entity.
Any retained investment is measured at fair value at
that date and the fair value is regarded as its fair value
on initial recognition as a financial asset. The difference
between the previous carrying amount of the jointly
controlled entity attributable to the retained interest
and its fair value is included in the determination of the
gain or loss on disposal of the jointly controlled entity.
In addition, the Company accounts for all amounts
previously recognized in other comprehensive income
in relation to that jointly controlled entity on the same
basis as would be required if that jointly controlled
entity had directly disposed of the related assets or
liabilities.
When the Company transacts with its jointly controlled
entity, profits and losses resulting from the transactions
with the jointly controlled entity are recognized in the
only financial statements using the equity method of
accounting. Under the equity method, an investment
in an jointly controlled entity is initially recognized
in the parent company only balance sheet at cost
and adjusted thereafter to recognize the Company's
share of the profit or loss and other comprehensive
income of the jointly controlled entity. In addition,
the Company accounted for its interests in jointly
controlled entity at a percentage of its ownership in
the jointly controlled entity.
When the Company subscribes for its jointly controlled
entity's newly issued shares at a percentage different
from its existing ownership percentage, the resulting
carrying amount of the investment differs from the
amount of the Company's proportionate interest in the
jointly controlled entity. The Company records such a
difference as an adjustment to investments accounted
for by the equity method, with a corresponding
amount credited or charged to capital surplus. If
additional subscription of the new shares of jointly
controlled entity results in a decrease in the ownership
interest, the proportionate amount of the gains or
losses previously recognized in other comprehensive
income in relation to that jointly controlled entity is
reclassified to profit or loss on the same basis as would
be required if the investee had directly disposed of
the related assets or liabilities. When the adjustment
should be debited to capital surplus, but the capital
surplus recognized from investments accounted for
by the equity method is insufficient, the shortage is
debited to retained earnings.
When the Company's share of losses of an jointly
controlled entity equals or exceeds the Company's
interest in that jointly controlled entity (which includes
any carrying amount of the investment accounted for
by the equity method and long-term interests that, in
substance, form part of the Company's net investment
in the jointly controlled entity), the Company
discontinues recognizing its share of further losses.
Additional losses are recognized only to the extent
that the Company has incurred legal or constructive
obligations or made payments on behalf of the jointly
controlled entity.
Company' parent company only financial statements
only to the extent of interests in the jointly controlled
entity that are not related to the Company.
Property, Plant and Equipment
Property, plant and equipment are tangible items
that held for use in the production, supply of goods
or services, for rental to others, or for administrative
purposes, and are expected to be used more than
twelve months. Property, plant and equipment
are stated at cost, less subsequent accumulated
depreciation and subsequent accumulated impairment
loss when it is probable that future economic benefits
associated with the item will flow to the Company and
the cost of the item can be measured reliably.
Properties in the course of construction for production,
supply or administrative purposes are carried at cost,
less any recognized impairment loss. Cost includes
professional fees. Such properties are classified to
the appropriate categories of property, plant and
equipment when completed and ready for intended
use. Depreciation of these assets, on the same basis as
other property assets, commences when the assets are
ready for their intended use.
Depreciation is recognized so as to write off the
cost of assets less their residual values over their
estimated useful lives, using the straight-line method.
The estimated useful lives, residual values and
depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis in
accordance with IAS 8 "Accounting Policies, Changes
in Accounting Estimates and Errors".