KINGSMEN CREATIVES LTD
ANNUAL REPORT
2014
47
2.
Summary of significant accounting policies (cont’d)
Foreign currency transactions and balances
The functional currency of the Company is the Singapore dollar as it reflects the primary economic environment in
which the Company operates.
Transactions in foreign currencies are recorded in the functional currency at the exchange rates ruling at the dates of
the transactions. At the end of each reporting period, recorded monetary balances, balances measured at historical
cost that are denominated in non-functional currencies and balances measured at fair value that are denominated
in non-functional currencies are reported at the exchange rates ruling at the end of the reporting period, initial
transaction dates and fair value measurement dates respectively. All realised and unrealised exchange adjustment
gains and losses are dealt with in profit or loss, except when recognised in other comprehensive income.
The presentation currency is the functional currency.
Translation of financial statements of other entities
Each entity in the Group determines its appropriate functional currency to reflect the primary economic environment
in which the entity operates in. In translating the financial statements of an investee for incorporation in the
consolidated financial statements in the presentation currency i.e. the Singapore dollar, the assets and liabilities
denominated in other currencies are translated at the exchange rates ruling at the end of the reporting period and
the profit or loss items are translated at average exchange rates for the reporting period. The resulting translation
adjustments (if any) are recognised in other comprehensive income and accumulated in a separate component of
equity until the disposal of that investee.
The step-by-step method is used whereby the financial statements of the foreign operation are first translated into
the functional currency of any intermediate holding company/companies and then translated into the functional
currency of the Company.
Segment reporting
The Group discloses financial and descriptive information about its consolidated reportable segments. Reportable
segments are operating segments or aggregations of operating segments that meet specified criteria. Operating
segments are components about which separate financial information is available that is evaluated regularly by the
chief operating decision makers in deciding how to allocate resources and in assessing the performance. Generally,
financial information is reported on the same basis as is used internally for evaluating operating segment performance
and deciding how to allocate resources to operating segments.
Subsidiaries
A subsidiary is an entity that is controlled by the Group and the Group 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.
The existence and effect of substantive potential voting rights that the Group has the practical ability to exercise
(that is, substantive rights) are considered when assessing whether the Group controls another entity.
In the Company’s separate financial statements, an investment in a subsidiary is accounted for at cost less any
allowance for impairment in value. Impairment loss recognised in profit or loss for a subsidiary is reversed only if
there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment
loss was recognised. The carrying value and the net book value of the investment in a subsidiary are not necessarily
indicative of the amount that would be realised in a current market exchange.
Associates
An associate is an entity in which the Group has a significant influence and that is neither a subsidiary nor a joint
arrangement of the Group. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those policies. An investment in an associate includes
goodwill on acquisition, which is accounted for in accordance with FRS 103 Business Combinations. However, the
entire carrying amount of the investment is tested under FRS 36 Impairment of Assets for impairment, by comparing
its recoverable amount (higher of value in use and fair value) with its carrying amount, whenever application of the
requirements in FRS 39 Financial Instruments: Recognition and Measurement indicates that the investment may be
impaired.
Notes to the Financial Statements
31 December 2014
