Notes to The
Financial Statements
Year ended 31 December 2015
3 Significant accounting policies (Cont’d)
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.
Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates at the reporting
date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates at the
dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation
are treated as assets and liabilities of the foreign operation and translated at the exchange rate at the end of the
reporting period.
Foreign currency differences are recognised in the foreign currency translation reserve in equity. When a foreign
operation is disposed of such that control is lost, the cumulative amount in the foreign currency translation reserve
related to that foreign operation is transferred to the Statement of Total Return as part of the gain or loss on
disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation
while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.
Hedge of net investment in foreign operations
The Group applies hedge accounting to foreign currency differences arising between the functional currency of
the foreign operations and the parent entity’s functional currency (Singapore dollars), regardless of whether the net
investment is held directly or through an intermediate parent.
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net
investment in a foreign operation are recognised in the foreign currency translation reserve. To the extent that the
hedge is ineffective, such differences are recognised in the Statement of Total Return. When the hedged part of a
net investment is disposed of, the relevant amount in the foreign currency translation reserve is transferred to the
Statement of Total Return as part of the profit or loss on disposal.
101
ParkwayLife REIT
Annual Report 2015
