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2. Summary of Significant Accounting Policies(cont’d)
FINANCIAL INSTRUMENTS (cont’d)
Financial liabilities and equity instruments (cont’d)
Trade and other payables
Trade and other payables are initially recognised at fair value, net of transaction costs, and are subsequently
measured at amortised cost, using the effective interest method, with interest expense recognised on an effective
yield basis except for short-term payables when the effect of discounting would be immaterial.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled
or expired.
Offsetting arrangements
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position
when the Co-operative and the Group has a legally enforceable right to set off the recognised amounts; and intends
either to settle on a net basis, or to realise the asset and settle the liability simultaneously. A right to set-off must be
available today rather than being contingent on a future event and must be exercisable by any of the counterparties,
both in the normal course of business and in the event of default, insolvency or bankruptcy.
ASSOCIATES
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an
interest in a joint venture. 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 results and assets and liabilities of associates are incorporated in these consolidated financial statements using
the equity method of accounting, except when the investment is classified as held for sale, in which case it is
accounted for under FRS 105
Non-current Assets Held for Sale and Discontinued Operations
. Under the equity
method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted
for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the
value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which
includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are
not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the
associate.
An investment in an associate is accounted for using the equity method from the date on which the investee
becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment
over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as
goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net
fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised
immediately in profit or loss in the period in which the investment is acquired.
The requirements of FRS 39 are applied to determine whether it is necessary to recognise any impairment loss with
respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment
(including goodwill) is tested for impairment in accordance with FRS 36
Impairment of Assets
as a single asset
by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying
amount, any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of
that impairment loss is recognised in accordance with FRS 36 to the extent that the recoverable amount of the
investment subsequently increases.
Notes to Financial Statements
December 31, 2014
