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Notes to the financial statements
31 December 2014
Bursa Malaysia
•
Annual Report 2014
114
2. Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(q) Income taxes (cont’d.)
(ii) Deferred tax (cont’d.)
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation
to the underlying transaction in other comprehensive income or directly in equity and deferred tax arising from a business combination is
adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
(r) Foreign currency
(i) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which
the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the
Company’s functional currency.
(ii) Foreign currency transactions
In preparing the financial statements of the individual entities, transactions in foreign currencies are measured in the respective functional
currencies at the exchange rates approximating those ruling at the transaction dates. At each financial year end, monetary assets and liabilities
denominated in foreign currencies are translated at the rates of exchange ruling at the financial year end. Non-monetary items denominated
in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions.
Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair
value was determined.
Exchange differences arising from the settlement of monetary items, or on translating monetary items at the financial year end 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 operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are not included in profit or loss for the period until
their impairment or disposal.
(iii) Malaysian subsidiary with foreign currency as its functional currency
The results and financial position of a subsidiary that has a functional currency different from the presentation currency of the consolidated
financial statements are translated into RM as follows:
• Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the financial year end;
• Income and expenses for each statement of comprehensive income or separate income statement presented are translated at average
monthly exchange rates, which approximate the exchange rates at the dates of the transactions; and
• All resulting exchange differences are recognised directly in other comprehensive income. On disposal of a subsidiary with foreign currency
as its functional currency, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign
currency translation reserve relating to that particular subsidiary is recognised in profit or loss.