NOTES TO THE
FINANCIAL STATEMENTS
Year ended 31 December 2014
3
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (cont’d)
Special purpose entities
The Group has established a number of special purpose entities (SPEs) for investment purposes. The Group does
not have any direct or indirect shareholdings in these entities. An SPE is consolidated if, based on an evaluation
of the substance of its relationship with the Group and the SPE’s risks and rewards, the Group concludes that it
controls the SPE. SPEs controlled by the Group were established under terms that impose strict limitations on
the decision-making powers of the SPEs’ management and that result in the Group receiving the majority of the
benefits related to the SPEs’ operations and net assets, being exposed to the majority of risks incident to the
SPEs’ activities, and retaining the majority of the residual or ownership risks related to the SPEs or their assets.
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.
Accounting for subsidiaries by the Trust
Investments in subsidiaries are stated in the Trust’s statement of financial position at cost less accumulated
impairment losses.
3.2 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the
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 the reporting 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 period, adjusted for effective interest and payments during the period, and the amortised
cost in foreign currency translated at the exchange rate at the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies that aremeasured 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
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the
date of the transaction.
Foreign currency differences arising on retranslation are recognised in the Statement of Total Return, except for
differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment
in foreign operations, and financial liabilities designated as hedges of the net investment in foreign operations as
mentioned below, which are recognised in the Unitholders’ funds.
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PA R K WAY L I F E R E I T
