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AFRICAN DAWN Annual Report 2016

Accounting Policies continued 1.5 Investment in associate Associates Associates are those entities, including unincorporated entities, over which the group has the ability to exercise significant influence, but no control or joint control, through participation in the financial and operating policy decisions of the investment (that is neither a subsidiary nor an investment in a joint arrangement). Significant influence Significant influence is generally demonstrated by the group holding in excess of 20%, but no more than 50%, of the voting rights. Dates and equity accounting The profit or loss of the associate and assets and liabilities, including goodwill identified on acquisition, net of any accumulated impairment losses, are included in the group financial statements using the equity method of accounting from the date significant influence commences until the date significant influence ceases. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The group’s investment in associates includes goodwill identified on acquisition. The group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group’s share of losses in an associate equals or exceeds its interest in the associate the group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. Where an associate has a reporting period that is different from that of the group, the results of the associate are adjusted to reflect a reporting period consistent with the group’s reporting period. Elimination and accounting policies Profits and losses resulting from upstream and downstream transactions between the group and its associate are recognised in the group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group. Changes in ownership If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. Company - separate financial statements Investments in associates are accounted for using the equity method in the company financial statements. The carrying amounts of these investments are reviewed annually and impaired when necessary by applying the policy described in policy 1.12. 1.6 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership to the lessee, all other leases are classified as operating leases. AFRICAN DAWN ANNUAL REPORT 2016 39


AFRICAN DAWN Annual Report 2016
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