SEC Form 17-A: Annual Report - the solid group inc website

- 23 -
Foreign currency 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 recognized in the
consolidated statement of income as part of income or loss from operations.
(b)
Translation of Financial Statements of Foreign Subsidiaries
The operating results and financial position of BRL and Fil-Dragon, which are
measured using the United States (U.S.) dollar and Chinese yuan renminbi (RMB),
respectively, their respective functional currencies, are translated to Philippine
peso, the Group’s functional currency as follows:
(i) Assets and liabilities for each statement of financial position presented are
translated at the closing rate at the end of the reporting period;
(ii) Income and expenses for each profit or loss account are translated at the
monthly average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the
rates prevailing at the dates of the transactions); and,
(iii) All resulting exchange differences are recognized as a separate component of
other comprehensive income.
On consolidation, exchange differences arising from the translation of the net
investments in BRL and Fil-Dragon are recognized in other comprehensive
income and taken to equity under Revaluation Reserves. When a foreign
operation is partially disposed of or sold, such exchange differences are
reclassified in the consolidated statement of income as part of the gain or loss on
sale of the investment.
The translation of the financial statements into Philippine peso should not be
construed as a representation that the U.S. dollar and Chinese yuan RMB amounts
could be converted into Philippine peso amounts at the translation rates or at any
other rates of exchange.
2.18 Impairment of Non-financial Assets
The Group’s property, plant and equipment and other non-financial assets are subject
to impairment testing. All individual assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable.
For purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units). As a result, assets are
tested for impairment either individually or at the cash-generating unit level.
Impairment loss is recognized for the amount by which the asset’s or cash-generating
unit’s carrying amount exceeds its recoverable amounts which is the higher of its fair
value less costs to sell and its value in use. In determining value in use, management
estimates the expected future cash flows from each cash-generating unit and determines
the suitable interest rate in order to calculate the present value of those cash flows. The
data used for impairment testing procedures are directly linked to the Group’s latest
approved budget, adjusted as necessary to exclude the effects of asset enhancements.