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SINGAPORE TECHNOLOGIES ENGINEERING LTD Annual Report 2011119NOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)3. Summary of significant accounting policies (continued)(a)Basis of consolidation n (continued)(v)Investments in associates and jointly controlled entities (equity-accounted investees) (continued)The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income from the datethat significant influence or joint control commences until the date that significant influence or joint control ceases. The reporting datesfor the associates and jointly controlled entities and the Group are identical and the accounting policies conform to those used by theGroup for like transactions and events in similar circumstances.When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, includingany long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Grouphas an obligation or has made payments on behalf of the investee.In the Company’s separate financial statements, investments in associates and jointly controlled entities are accounted for at cost lessaccumulated impairment losses.(vi)Acquisition of non-controlling interestsAcquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore thecarrying amounts of assets and liabilities are not changed and goodwill is not recognised as a result of such transactions. The adjustmentsto non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. Any difference between the fair valueof the consideration paid and the carrying value of the additional interest acquired will be recognised within equity.(vii)Transactions eliminated on consolidationAll significant inter-company balances and transactions are eliminated on consolidation.(b)Foreign currency(i)Foreign currency transactionsTransactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and arerecorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Themajor functional currencies of the Group entities are Singapore dollars, United States dollars and Euro. Monetary assets and liabilitiesdenominated in foreign currencies are translated at the closing rate of exchange ruling at the balance sheet date.Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rates as atthe dates of the transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange ratesat the date when the fair value was determined.Monetary item carried at amortised cost in the functional currency at the beginning of the year, adjusted for effective interest andpayments during the year, and the amortised cost in foreign currency are translated at the exchange rate at the end of the year.Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslationof available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign operation that iseffective (see note c(iii) below), or qualifying cash flow hedges, which are recognised in other comprehensive income.