Singapore Airlines 2009 Annual Report Download - page 99

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2 Accounting Policies (continued)
(c) Basis of consolidation (continued)
The accounting policy for goodwill is set out in Note 2(e)(i). Any excess of the Group’s share in the net
fair value of the acquired subsidiary company’s identifi able assets, liabilities and contingent liabilities
over the cost of the business combination is recognised in the profi t and loss account on the date
of acquisition.
Subsidiary companies are consolidated from the date of acquisition, being the date on which
the Group obtains control, and continue to be consolidated until the date that such control ceases.
Minority interests represent the portion of profi t or loss and net assets in subsidiary companies not held
by the Group and are presented separately in the consolidated profi t and loss account and within equity
in the consolidated balance sheet, separately from equity attributable to equity holders of the Company.
On acquisition of minority interests, the difference between the consideration and book value of the
share of the net assets acquired is refl ected as being a transaction between owners and recognised
directly in equity. Gain or loss on disposal of minority interests is recognised directly in equity.
(d) Subsidiary, associated and joint venture companies
In the Company’s separate fi nancial statements, investment in subsidiary and associated companies
are accounted for at cost less accumulated impairment losses.
A subsidiary company is defi ned as an entity over which the Group has the power to govern the
fi nancial and operating policies so as to obtain benefi ts from its activities, generally accompanied by a
shareholding giving rise to the majority of the voting rights.
An associated company is defi ned as an entity, not being a subsidiary company or joint venture
company, in which the Group has signifi cant infl uence, but not control, generally accompanied by
a shareholding giving rise to not less than 20% of the voting rights. A list of the Group’s associated
companies is shown in Note 23 to the fi nancial statements.
The Group’s investments in associated companies are accounted for using the equity method. Under
the equity method, the investment in associated company is measured in the balance sheet at cost
plus post-acquisition changes in the Group’s share of net assets of the associated company. Goodwill
relating to an associated company is included in the carrying amount of the investment. Any excess
of the Group’s share of the net fair value of the associated company’s identifi able assets, liabilities
and contingent liabilities over the cost of investment is deducted from the carrying amount of the
investment and is recognised as income as part of the Group’s share of profi t or loss of the associated
company in the period in which the investment is acquired.
When the Group’s share of losses in an associated company equals or exceeds its interest in the
associated company, the Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associated company.