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CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
Basis of consolidation
continued
Controlled entities
Investments in controlled entities are carried in the Company’s financial statements at cost less impairment.
Investments in associates
Associates are those entities in which the Group has significant influence, but not control or joint control, over the entity. Significant
influence is presumed to exist when the Group owns between 20% and 50% of the voting power of another entity.
Investments in associates are accounted for using the equity method and recognised initially at cost. The cost of the investments includes
transaction costs and goodwill on acquisition.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity accounted
investments, after adjustments for impairment and after aligning the accounting policies with those of the Group, from the date that
significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity accounted investment, the carrying value of the investment, including
any long-term interests that form part thereof, is reduced to zero, and the recognition of further loss is discontinued except to the extent
that the Company has an obligation or has made payments on behalf of the investee.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Joint arrangements
Under AASB 11
Joint Arrangements
investments in joint arrangements are classified as either joint operations or joint ventures depending
on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. The Company has
assessed the nature of its joint arrangements and determined to have both joint operations and joint ventures.
Joint operations
The Group recognises its direct right, and its share of, jointly held assets, liabilities, revenues and expenses of joint operations. These have
been incorporated in the financial statements under the appropriate headings. Details of joint operations are set out in Note 27:
Joint
operations
.
Joint ventures
Interests in joint ventures are accounted for using the equity method. Under this method, the interests are initially recognised in the
consolidated statement of financial position at cost, including transaction costs and goodwill on acquisition, and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income in profit or loss and
other comprehensive income respectively.
When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture (which includes any long-term
interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of the joint ventures have been adjusted for where necessary, to ensure consistency with the policies adopted by the
Group.
Other
investments
Other investments are accounted for as either available-for-sale financial assets, or fair value through profit and loss financial assets.
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