2.
Summary of significant accounting policies (cont’d)
2.3 Standards issued but not yet effective (cont’d)
Amendments to FRS 27
Equity Method in Separate Financial Statements
Amendments to FRS 27 are effective for financial periods beginning on or after 1 January 2016. These amendments allow
the equity method as an accounting option for investments in subsidiaries and joint ventures in an entity’s separate financial
statements. Upon adoption of Amendments to FRS 27, the dividend is recognised in profit or loss unless the entity elects to use
the equity method, in which case the dividend is recognised as a reduction from the carrying amount of the investment.
FRS 115
Revenue from Contracts with Customers
FRS 115 is effective for financial periods beginning on or after 1 January 2017. FRS 115 establishes a five-step model that apply
to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or
the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of
some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment
or intangibles).
Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations;
changes in contract asset and liability account balances between periods and key judgements and estimates.
FRS 109
Financial Instruments
FRS 109 is effective for financial periods beginning on or after 1 January 2018. FRS 109 uses a single approach to determine
whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in FRS 39. The approach
in FRS 109 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow
characteristics of the financial assets, and enables companies to reflect their risk management activities better in their financial
statements, and, in turn, help investors to understand the effect of those activities on future cash flows. FRS 109 is principle-
based, and will more closely align hedge accounting with risk management activities undertaken by companies when hedging
their financial and non-financial risk exposures. The impairment requirements in FRS 109 are based on an expected credit loss
model and replace the FRS 39 incurred loss model.
The Group is currently evaluating the impact of the changes and assessing whether the adoption of Amendments to FRS 27,
FRS 115 and FRS 109 will have an impact on the Group and the Company.
2.4 Functional and foreign currency
The Group’s consolidated financial statements are presented in SGD, which is also the Company’s and its subsidiary companies’
functional currency. Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiary
companies and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at
the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange
ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value
in a foreign currency are translated using the exchange rates at the date when the fair value was measured.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting
period are recognised in profit or loss.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
Hock Lian Seng Holdings Limited
Annual report 2014
48
