NOTES TO FINANCIAL STATEMENTS
30 June 2015
Karin Technology Holdings Limited
Annual Report 2015
60
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUBSIDIARIES
A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control
is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the
Group the current ability to direct the relevant activities of the investee).
When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
(a)
the contractual arrangement with the other vote holders of the investee;
(b)
rights arising from other contractual arrangements; and
(c)
the Group’s voting rights and potential voting rights.
The results of subsidiaries are included in the Company’s profit or loss to the extent of dividends received and
receivable. The Company’s investments in subsidiaries are stated at cost less any impairment losses.
INVESTMENT IN AN ASSOCIATE
An associate is an entity in which the Group has a long term interest of generally not less than 20% of the
equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint
control over those policies.
The Group’s investment in an associate is stated in the consolidated statement of financial position at the Group’s
share of net assets under the equity method of accounting, less any impairment losses. Adjustments are made
to bring into line any dissimilar accounting policies that may exist.
The Group’s share of the post-acquisition results and other comprehensive income of an associate are included
in profit or loss. In addition, when there has been a change recognised directly in the equity of the associate, the
Group recognises its share of any changes, when applicable, in the consolidated statement of changes in equity.
Unrealised gains and losses resulting from transactions between the Group and its associate are eliminated to
the extent of the Group’s investment in the associate, except where unrealised losses provide evidence of an
impairment of the assets transferred. Goodwill arising from the acquisition of the associate is included as part
of the Group’s investment in an associate.
If an investment in an associate becomes an investment in a joint venture, the retained interest is not remeasured.
Instead, the investment continues to be accounted for under the equity method. In all other cases, 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 retained investment and proceeds from disposal is recognised in profit or loss.
The result of the associate is included in the Company’s profit or loss to the extent of dividends received and
receivable. The Company’s investment in an associate is treated as non-current asset and is stated at cost less
any impairment losses.
