Annual Report - Bina Puri

Notes to and Forming Part of the Financial Statements (Cont’d)1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(t)PayablesPayables are stated at cost and are recognised when there is a contractual obligation to deliver cash or anotherfinancial asset to settle the obligation.(u) Government grantsGovernment grants are recognised at their fair value in the balance sheet as deferred income where there isreasonable assurance that the grant will be received and all conditions attached to the grant will be complied with.Grants that compensate the Group for expenses incurred are recognised as income over the periods necessaryto match the grant on a systematic basis to the costs that it is intended to compensate. Grants that compensatethe Group for the cost of an asset are recognised as income on a systematic basis over the useful life of the asset.(v) Foreign currencies(i)Functional and presentation currencyThe individual financial statements of each entity in the Group are measured using the functional currency ofthe primary economic environment in which the entity operates (“the functional currency”).(ii)Foreign currency transactionsIn preparing the financial statements of the individual entities, transactions in currencies other than theentity’s functional currency are recorded in the functional currencies using the exchange rates prevailing atthe dates of the transactions.At each balance sheet date, monetary items denominated in foreign currenciesare translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value thatare denominated in foreign currencies are translated at the rates prevailing on the date when the fair valuewas determined. Non-monetary items that are measured in terms of historical cost in a foreign currency arenot translated.Exchange differences arising on the settlement of monetary items, and on the translation of monetary items,are included in the income statement for the period except for exchange differences arising on monetaryitems that form part of the Group’s net investment in foreign operations. Exchange differences arising onmonetary items that form part of the Group’s net investment in foreign operations, where that monetaryitem is denominated in either the functional currency of the reporting entity or the foreign operations, areinitially taken directly to the foreign currency translation reserve within equity until the disposal of the foreignoperations, at which time they are recognised in the income statement. Exchange differences arising onmonetary items that form part of the Group’s net investment in foreign operations, where that monetaryitem is denominated in a currency other than the functional currency of either the reporting entity or theforeign operations, are recognised in the income statement for the period. Exchange differences arising onmonetary items that form part of the Company’s net investment in foreign operations, regardless of thecurrency of the monetary item, are recognised in the income statement of the Company or the individualfinancial statements of the foreign operations, as appropriate.Exchange differences arising on the translation of non-monetary items carried at fair value are recognised inincome statement for the period except for the differences arising on the translation of non-monetary itemsin respect of which gains and losses are recognised directly in equity. Exchange differences arising from suchnon-monetary items are also recognised directly in equity.56 BINA PURI HOLDINGS BHDAnnual Report 2007