2. Summary of significant accounting policies (cont’d)
2.3 Standards issued but not yet effective (cont’d)
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 Directors are currently evaluating the impact of the changes and assessing whether
the adoption of FRS 115 and FRS 109 will have an impact on the Group.
2.4 Foreign currency
The financial statements are presented in Singapore Dollar, which is also the Company’s
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.
(a) Transactions and balances
Transactions in foreign currencies are measured in the respective functional
currencies of the Company and its subsidiaries 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 exchange rate 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
except for exchange differences arising on monetary items that form part of the
Group’s net investment in foreign operations, which are recognised initially in other
comprehensive income and accumulated under foreign currency translation reserve
in equity. The foreign currency translation reserve is reclassified from equity to profit
or loss of the Group on disposal of the foreign operations.
NOTES TO THE FINANCIAL
STATEMENTS
For the financial year ended 30 June 2015
ASL Marine Holdings Ltd. /Annual Report 2015
78
