95
94
STARHILL
GLOBAL
REIT
Annual
Report
FY 2014/15
Notes to the
Financial Statements
Significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant
effect on the amount recognised in the financial statements are described in the following notes:
•
Note 4
– Valuation of investment properties
•
Note 6
– Impairment on interests in subsidiaries
•
Notes 8 and 26 – Valuation of financial instruments
2.5 Adoption of new/revised FRSs
(i) Subsidiaries
From 1 January 2014, in accordance with the transitional provisions of FRS 110
Consolidated Financial Statements
, the
Group has reassessed the control conclusion for its investees. FRS 110
Consolidated Financial Statements
introduces a new
control model that is applicable to all investees, by focusing on whether the Group has power over an investee, exposure,
or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns.
In particular, FRS 110 requires the Group to consolidate investees that it controls on the basis of de facto circumstances.
Based on its assessments, the Group concluded that there is no change in the investees it is consolidating and no financial
effect on the results and financial position of the Group for the current and previous financial period.
(ii) Offsetting of financial assets and financial liabilities
From 1 January 2014, the Group has adopted the Amendments to FRS 32
Financial Instruments: Presentation – Offsetting
Financial Assets and Financial Liabilities
. Under the amendments, to qualify for offsetting, the right to set off a financial
asset and a financial liability must not be contingent on a future event and must be enforceable both in the normal course of
business and in the event of default, insolvency or bankruptcy of the entity and all counterparties. Based on its assessments,
the Group concluded that there is no financial effect on the results and financial position of the Group for the current and
previous financial period.
3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently by the Group and the Trust to all periods in these financial
statements, and have been applied consistently by Group entities.
3.1 Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which
control is transferred to the Group. Control exists when the Group is exposed to or has rights to variable returns from its
involvement with an entity and has the ability to affect those returns through its power over the entity.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts
are generally recognised in the statement of total return.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in
connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the
fair value of the contingent consideration are recognised in the statement of total return.
Subsidiaries
Subsidiaries are entities controlled by the Group and include entities that are created to accomplish a narrow and well defined
objective such as the execution of a specific transaction where the substance of the relationship is that the Group controls
the entity. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the date that control ceases. The
accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.
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
Interests in subsidiaries are stated in the Trust’s balance sheet 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 Group entities at the exchange rates
at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting
period 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 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 period. Foreign currency differences arising on retranslation are recognised in the statement of total return.
Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates at the end of the reporting
period. 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 closing rate.
Foreign currency differences are recognised in foreign currency translation reserve. When a foreign operation is disposed of,
in part or in full, the relevant amount is transferred to the statement of total return.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the
foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net
investment in a foreign operation. These are recognised in the Trust’s statement of total return, and are reclassified to the
foreign currency translation reserve in the consolidated financial statements.
3.3 Plant and equipment
Recognition and measurement
Plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct
labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and when the
Group has an obligation to remove the asset or restore the site, an estimate of the cost of dismantling and removing the items
and restoring the site on which they are located.
When parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major
components) of plant and equipment.
The gain or loss on disposal of an item of plant and equipment is determined by comparing the proceeds from disposal with the
carrying amount of plant and equipment, and is recognised in the statement of total return.
Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable
that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably.
The cost of the day-to-day servicing of plant and equipment are recognised in the statement of total return as incurred.
