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PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.1 Basis of consolidation
(continued)
(v)
Investments in associates and joint ventures (equity-accounted investees) (continued)
Investments in associates and joint ventures are accounted for using the equity method. They are recognised initially
at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Group’s share of the profit or loss and other comprehensive income (“OCI”) of equity-accounted
investees, after adjustments to align the accounting policies with those of the Group, from the date that significant
influence or joint control commences until the date that significant influence or joint control ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the
investment, together with any long-term interests that form part thereof, is reduced to zero, and the recognition of
further losses is discontinued except to the extent that the Group has an obligation to fund the investee’s operations
or has made payments on behalf of the investee.
(vi)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with
equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
(vii) Subsidiaries, associates and joint ventures in the separate financial statements
Investments in subsidiaries, associates and joint ventures are stated in the Company’s statement of financial position
at cost less accumulated impairment losses.
3.2 Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange
rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the
reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain
or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the
year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in
a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of
the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for the
differences arising on the retranslation of available-for-sale equity instruments (except on impairment in which case
foreign currency differences that have been recognised in OCI are reclassified to profit or loss), which are recognised
in OCI.
Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either
other income or other operating expenses depending on whether foreign currency movements are in a net gain or
net loss position.
