56
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements
FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12
Consolidation - Special Purpose Entities.
FRS 110 defines the principle of control and establishes control as the basis for determining which entities are
consolidated in the consolidated financial statements. It also provides more extensive application guidance on assessing
control based on voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether
an investor has (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the
investee; and (iii) the ability to use its power over the investee to affect the amount of the returns. FRS 27 remains as
a standard applicable only to separate financial statements.
FRS 110 will take effect from financial years beginning on or after January 1, 2014, with full retrospective application,
subject to transitional provisions.
When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities it
currently does not consolidate may qualify for consolidation. The Group is currently estimating the effects of FRS 110
on its investments in the period of initial adoption.
FRS 111
Joint Arrangements and FRS 28 Investments in Associates and Joint Ventures
FRS 111 supersedes FRS 31 Interest in Joint Ventures and INT FRS 13 Jointly Controlled Entities - Non-Monetary
Contributions by Venturers.
FRS 111 classifies a joint arrangement as either a joint operation or a joint venture based on the parties’ rights and
obligations under the arrangement. The existence of a separate legal vehicle is no longer the key factor. A joint
operation is a joint arrangement whereby the parties which have joint control have rights to the assets and obligations
for the liabilities. A joint venture is a joint arrangement whereby the parties which have joint control have rights to
the net assets.
The joint venturer should use the equity method under the FRS 28 Investments in Associates and Joint Ventures
to account for a joint venture. The option to use proportionate consolidation method has been removed. For joint
operations, the Group directly recognises its rights to the assets, liabilities, revenues and expenses of the investee in
accordance with applicable FRSs.
FRS 111 will take effect from financial years beginning on or after January 1, 2014, with retrospective application
subject to transitional provisions.
NOTES TO FINANCIAL STATEMENTS
March 31, 2013
