TPSEAL 2010 Financial Results. - Serena Hotels

Notes to the Financial Statements (continued)
2 Summary of significant accounting policies (continued)
(b)
Consolidation (continued)
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses
in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in
the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Dilution gains and losses arising from investments in associates are recognised in the income statement.
Changes in accounting policy
The Group has changed its accounting policy for transactions with non-controlling interests and the accounting for loss of
control or significant influence from 1 January 2010 when revised IAS 27, ‘Consolidated and separate financial statements’,
became effective. The revision to IAS 27 contained consequential amendments to IAS 28, ‘Investments in associates’, and IAS
31, ‘Interests in joint ventures’.
Previously transactions with non-controlling interests were treated as transactions with parties external to the group. Disposals
therefore resulted in gains or losses in profit or loss and purchases resulted in the recognition of goodwill. On disposal or
partial disposal, a proportionate interest in reserves attributable to the subsidiary was reclassified to profit or loss or directly to
retained earnings.
Previously, when the Group ceased to have control or significant influence over an entity, the carrying amount of the investment
at the date control or significant influence became its cost for the purposes of subsequently accounting for the retained interests
as associates, jointly controlled entity or financial assets.
The Group has applied the new policy prospectively to transactions occurring on or after 1 January 2010. As a consequence, no
adjustments were necessary to any of the amounts previously recognised in the financial statements.
(c)
Functional currency and translation of foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities 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 Kenya Shillings, which is the Company’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement.
48 TPS EASTERN AFRICA LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2010