NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
60
THE STRAITS TRADING COMPANY LIMITED
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.6
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.
(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.
2.7
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.
