NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.7 FOREIGN CURRENCY (CONT’D)
(b)
CONSOLIDATED FINANCIAL STATEMENTS
For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of
exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates
prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in
other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income
relating to that particular foreign operation is recognised in profit or loss.
In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the
proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling
interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are
foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
2.8 SUBSIDIARIES
A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its
power over the investee.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
2.9 JOINT VENTURES AND ASSOCIATES
An associate is an entity over which the Group has the power to participate in the financial and operating policy decisions
of the investee but does not have control or joint control of those policies.
The Group accounts for its investments in associates and joint ventures using the equity method from the date on which
it becomes an associate or joint venture.
On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair value
of the investee’s identifiable assets and liabilities is accounted as goodwill and is included in the carrying amount of the
investment. Any excess of the Group’s share of the net fair value of the investee’s identifiable assets and liabilities over the
cost of the investment is included as income in the determination of the entity’s share of the associate or joint venture’s
profit or loss in the period in which the investment is acquired.
Under the equity method, the investment in associates or joint ventures are carried in the balance sheet at cost plus post-
acquisition changes in the Group’s share of net assets of the associates or joint ventures. The profit or loss reflects the
share of results of the operations of the associates or joint ventures. Distributions received from joint ventures or associates
reduce the carrying amount of the investment. Where there has been a change recognised in other comprehensive
income by the associates or joint ventures, the Group recognises its share of such changes in other comprehensive
income. Unrealised gains and losses resulting from transactions between the Group and associates or joint ventures are
eliminated to the extent of the interest in the associates or joint ventures.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint
venture, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of
the associate or joint venture.
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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
