NOTES TO THE FINANCIAL STATEMENTS
FOR THE FInAncIAL yEAR EnDED 30 JunE 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
w)
Functional and foreign currencies
Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the currency of
the primary economic environment in which that entity operates (the “functional currency”). The financial
statements of the Group are presented in Singapore dollars, which is the Company’s functional currency.
Transactions and balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into
the functional currency using the exchange rates prevailing at the dates of the transactions. Currency
translation gains and losses resulting from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the date of the initial transactions.
Non-monetary items measured at fair values in foreign currencies are translated using the exchange
rates at the date when the fair values are determined.
Translation of Group entities’ financial statements
The results and financial position of all the Group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the Group’s presentation
currency are translated into the presentation currency as follows:
(i)
Assets and liabilities are translated at the closing rates at the date of the balance sheet;
(ii)
Income and expenses are translated at average exchange rates (unless the average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated using the exchange rates at the dates of the
transactions); and
(iii)
All resulting exchange differences are recognised in the currency translation reserve within equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign
operations (including monetary items that, in substance, form part of the net investment in foreign
entities), and of borrowings and other currency instruments designated as hedges of such investments,
are taken to the foreign currency translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at the closing rate.
On disposal of a foreign group entity, the cumulative amount of the currency translation reserve relating
to that particular foreign entity is reclassified from equity and recognised in profit or loss when the gain
or loss on disposal is recognised.
78
ISOTEAM LTD.
ANNUAL REPORT 2016
