NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.5 BASIS OF CONSOLIDATION AND BUSINESS COMBINATIONS (CONT’D)
B)
Business combinations and goodwill (cont’d)
Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
For purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to the Group’s cash-generating units that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
The cash-generating units to which goodwill have been allocated is tested for impairment annually and whether
there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by
assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the
goodwill relates.
2.6 TRANSACTIONS WITH NON-CONTROLLING INTERESTS
Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company.
Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as
equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are
adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which
the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in
equity and attributed to owners of the Company.
2.7 FOREIGN CURRENCY
The financial statements are presented in Singapore Dollars, which is also the Company’s functional currency. Each entity
in the Group determines its own functional currency and items included in the financial statements of each entity are
measured using that functional currency.
(a)
TRANSACTIONS AND BALANCES
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its
subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating
those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated
at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was measured.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of
the reporting period are recognised in profit or loss. Exchange differences arising on monetary items that form
part of the Group’s net investment in foreign operations are recognised initially in other comprehensive income
and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is
reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
63
THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
