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Summary of significant accounting policies(x)(y)Borrowing CostsBorrowing costs incurred to finance the development of properties are capitalised during the period of time that isrequired to complete and prepare the assets for their intended use. Capitalisation of borrowing costs commences whenthe activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costsare being incurred. Borrowing costs are capitalised until the assets are ready for their intended use. Other borrowingcosts are taken to the profit and loss account over the period of borrowing using the effective interest rate method.Foreign CurrenciesTransactions in foreign currencies are measured in the functional currencies of the respective countries which the Groupoperates in and are recorded at exchange rates approximating those ruling at the transaction dates.Foreign currency monetary assets and liabilities are measured using the exchange rates ruling at each balance sheet date.All resultant exchange differences arising from the conversion are dealt with through the profit and loss account.For inclusion in Group accounts, all assets and liabilities of foreign subsidiaries and associated companies are translatedinto Singapore dollars, the functional currency of the Company, at the exchange rates ruling at each balance sheet date.Exchange differences due to such currency translations as well as the exchange differences in respect of offsettingforeign currency loans or other hedging instruments are dealt with in reserves. The trading results of foreign subsidiariesand associated companies are translated into Singapore dollars at the average exchange rates for the year.188Summary of significant accounting policiesKeppel Land LimitedReport to Shareholders 2006