Straco Corporation Limited • Annual Report 2014
48
NOTES TO THE FINANCIAL STATEMENTS
3
Significant accounting policies (cont’d)
3.2 Foreign currency (cont’d)
Foreign operations
The assets and liabilities of foreign operations, excluding goodwill and fair value adjustments arising on acquisition, are translated to Singapore dollars
at exchange rates at the end of reporting period. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates
at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are
treated as assets and liabilities of the foreign operation and translated at the closing date. For acquisitions prior to 1 January 2005, the exchange rates
at the date of acquisition were used.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation
reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is
allocated to the non-controlling interests. When a foreign operation is disposed of such that control or significant influence is lost, the cumulative
amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal. When the
Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the
cumulative amount is reattributed to non-controlling interests.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future,
foreign exchange gains or losses arising from such a monetary item are considered to form part of a net investment in a foreign operation. These are
recognised in other comprehensive income, and are presented in the foreign currency translation reserve in equity.
3.3 Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials
and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, the costs of dismantling and
removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost may also include transfers from equity of
any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to
the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of
property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying
amount of property, plant and equipment, and are recognised net within other income/other expense in profit or loss.
