Kalina Power to reverse intangible asset relating to New Energy Asia
The Australian Securities and Investments Commission (ASIC) noted the decision by ASX-listed Kalina Power Limited (Kalina) to amend the accounting for its subsidiary New Energy Asia Limited (NEA) when it releases its half-year financial report for 31 December 2016.
ASIC made inquiries about Kalina's deconsolidation of NEA in its financial report for the year ended 30 June 2015 and the subsequent reconsolidation of NEA in the 30 June 2016 financial report. Kalina will now treat NEA as never having been deconsolidated. Among other adjustments, an intangible asset of $4.2 million recognised on reconsolidation will now be reversed.
Kalina sold a portion of its holding in NEA reducing its holding below 50 per cent but retained power in, and control over, NEA due to other factors.
As outlined in an earlier statement, ASIC calls on preparers of financial reports to ensure that they provide useful and meaningful information for investors and other users of those reports. ASIC reminds companies and those involved in preparing and approving financial reports to pay close attention to the substance of all transactions and to consider all rights and relationships that give the investor power over an investee.