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AVI-TECH ELECTRONICS LIMITED
| ANNUAL REPORT 2015
NOTES TO
FINANCIAL STATEMENTS
30 June 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
•
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
•
Level 3 inputs are unobservable inputs for the asset or liability.
ADOPTION OF NEW AND REVISED STANDARDS – On 1 July 2014, the Group adopted all the new and
revised FRSs and Interpretations of FRS (“INT FRS”) that are effective from that date and are relevant to its
operations. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the Group’s
and Company’s accounting policies and has no material effect on the amounts reported for the current and
prior years except as disclosed below:
New and revised standards on consolidation, joint arrangements, associates and disclosures
In September 2011, a package of five standards on consolidation, joint arrangements, associates and
disclosures was issued comprising FRS 110
Consolidated Financial Statements
, FRS 111
Joint Arrangements
,
FRS 112
Disclosure of Interests in Other Entities
, FRS 27 (as revised in 2011)
Separate Financial Statements
and FRS 28 (as revised in 2011)
Investments in Associates and Joint Ventures
. Subsequent to the issue of these
standards, amendments to FRS 110, FRS 111 and FRS 112 were issued to clarify certain transitional guidance
on the first-time application of these Standards.
In the current year, the Group has applied for the first time FRS 110, FRS 111, FRS 112, FRS 27 (as revised
in 2011) and FRS 28 (as revised in 2011) together with the amendments to FRS 110, FRS 111 and FRS 112
regarding the transitional guidance.
The impact of the application of these standards is set out below.
Impact of the application of FRS 110
FRS 110 replaces the parts of FRS 27
Consolidated and Separate Financial Statements
that deal with
consolidated financial statements and INT FRS 12
Consolidation – Special Purpose Entities
. FRS 110 changes
the definition of control such that an investor has control over an investee when a) it has power over the
investee, b) it is exposed, or has rights, to variable returns from its involvement with the investee and c) has
the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have
control over an investee. Previously, control was defined as the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. Additional guidance has been included in FRS
110 to explain when an investor has control over an investee. Some guidance included in FRS 110 that deals
with whether or not an investor that owns less than 50% of the voting rights in an investee has control over
the investee is relevant to the Group.
Management reassessed the control conclusion for its investees at 1 July 2014 in accordance with FRS 110
and concluded that there is no other investee for which the Group has control over, other than those already
accounted for as subsidiaries as at 1 July 2014.
Impact of the application of FRS 112
FRS 112 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint
arrangements, associates and/or unconsolidated structured entities. In general, the application of FRS 112
has resulted in more extensive disclosures in the consolidated financial statements.
