Annual Report 2011 - Goodbaby International Holdings Limited

NOTES TO FINANCIAL STATEMENTS
31 December 2011
3.2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Foreign currencies
These financial statements are presented in Hong Kong dollars (“HK$”), which is the Company’s
functional and presentation 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. Foreign currency transactions recorded by the entities in the Group are
initially recorded using their respective functional currency rates ruling at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the functional currency rates of exchange ruling at the end of the reporting period. All differences
arising on settlement of translation of monetary items are taken to the statement of
comprehensive income.
All differences arising on settlement or translation of monetary items are taken to the income
statement with the exception of monetary items that are designated as part of the hedge of the
Group’s net investment of a foreign operation. These are recognised in other comprehensive
income until the net investment is disposed of, at which time the cumulative amount is reclassified
to the income statement. Tax charges and credits attributable to exchange differences on those
monetary items are also recorded in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rates 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 determined. The gain or loss arising on retranslation of a non-monetary
item is treated in line with the recognition of the gain or loss on change in fair value of the item
(i.e., translation differences on item whose fair value gain or loss is recognised in other
comprehensive income or profit or loss is also recognised in other comprehensive income or profit
or loss, respectively).
The functional currencies of certain subsidiaries and a jointly-controlled entity are currencies other
than HK$. As at the end of the reporting period, the assets and liabilities of these entities are
translated into the presentation currency of the Group at the exchange rates ruling at the end of
the reporting period and their statement of comprehensive income are translated into HK$ at the
weighted average exchange rates for the year.
The resulting exchange differences are recognised in other comprehensive income and
accumulated in the cumulative translation adjustments. On disposal of a foreign operation, the
component of other comprehensive income relating to that particular foreign operation is
recognised in the statement of comprehensive income.
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