NOTES
TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2016
(In Singapore dollars)
63
MTQ CORPORATION LIMITED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.17 Joint arrangements
A joint arrangement is a contractual arrangement whereby two or more parties have joint control. Joint control is
the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing control.
A joint arrangement is classified either as joint operation or joint venture, based on the rights and obligations of
the parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the assets and obligations for the liabilities
relating to the arrangement, the arrangement is a joint operation. To the extent the joint arrangement provides the
Group with rights to the net assets of the arrangement, the arrangement is a joint venture.
2.18 Joint venture
The Group recognises its interest in the joint venture using the equity method from the date on which it becomes
a joint venture.
On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair
value of the investee’s identifiable assets and liabilities is accounted as goodwill. Any excess of the Group’s share
of the net fair value of the investee’s identifiable assets and liabilities over the cost of the investment is included
as income in the determination of the entity’s share of joint venture’s profit or loss in the period in which the
investment is acquired.
Under the equity method, the investment in joint venture is carried in the balance sheet at cost plus post-acquisition
changes in the Group’s share of net assets of the joint venture. The profit or loss reflects the share of results of
the operations of the joint venture. Distributions received from the joint venture reduce the carrying amount of
the investment. Where there has been a change recognised in other comprehensive income by the joint venture,
the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses
resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in
the joint venture.
When the Group’s share of losses exceeds its interest in the joint venture, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the joint venture.
After the application of the equity method, the Group determines whether it is necessary to recognise an additional
impairment loss on the Group’s investment in joint venture. The Group determines at the end of each reporting
period whether there is any objective evidence that the investment in joint venture is impaired. If this is the case,
the Group calculates the amount of impairment as the difference between the recoverable amount of the joint
venture and its carrying value and recognises the amount in profit or loss.
The financial statements of the joint venture used in applying the equity method are prepared as of the same
reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line
with those of the Group.
