Huawei 2012 Annual Report Download - page 46

Consolidated Financial Statements Summary and Notes
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A jointly controlled entity is an entity which
operates under a contractual arrangement
between the Group and other parties, where
the contractual arrangement establishes that
the Group and one or more of the other
parties share joint control over the economic
activity of the entity.
An investment in an associate or a jointly
controlled entity is accounted for in the
consolidated financial statements under the
equity method. Under the equity method,
the investment is initially recorded at cost,
adjusted for any excess of the Group’s
share of the acquisition-date fair values
of the investee’s identifiable net assets
over the cost of the investment (if any).
Thereafter, the investment is adjusted for
the post acquisition change in the Group’s
share of the investee’s net assets and any
impairment loss relating to the investment
(see note 1(k)). Any acquisition-date excess
over cost, the Group’s share of the post-
acquisition, post-tax results of the investees
and any impairment losses for the year
are recognised in the consolidated income
statement, whereas the Group’s share of
the post-acquisition post-tax items of the
investees’ other comprehensive income is
recognised in the consolidated statement of
comprehensive income.
When the Group’s share of losses exceeds
its interest in the associate or the jointly
controlled entity, the Group’s interest is
reduced to Nil and recognition of further
losses is discontinued except to the extent
that the Group has incurred legal or
constructive obligations or made payments
on behalf of the investee. For this purpose,
the Group’s interest is the carrying amount
of the investment under the equity method
together with the Group’s long-term
interests that in substance form part of the
Group’s net investment in the associate or
the jointly controlled entity.
Unrealised profits and losses resulting from
transactions between the Group and its
associates and jointly controlled entities are
eliminated to the extent of the Group’s
interest in the investee, except where
unrealised losses provide evidence of an
impairment of the asset transferred, in
which case they are recognised immediately
in profit or loss.
When the Group ceases to have significant
influence over an associate or joint control
over a jointly controlled entity, it is accounted
for as a disposal of the entire interest in
that investee, with a resulting gain or loss
being recognised in profit or loss. Any
interest retained in that former investee at
the date when significant influence or joint
control is lost is recognised at fair value and
this amount is regarded as the fair value
on initial recognition of a financial asset
or, when appropriate, the cost on initial
recognition of an investment in an associate.
(g) Investment properties
Investment properties are buildings which
are owned to earn rental income and/or for
capital appreciation.
Investment properties are stated in the
consolidated balance sheet at cost less
depreciation and impairment losses (see
note 1(k)). Rental income from investment
properties is accounted for as described in
note 1(u)(iv).