notes to the financial statements - Singapore Technologies ...

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118 SIMPLY SMARTERNOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)3. Summary of significant accounting policies (continued)(a)Basis of consolidation (continued)(ii)SubsidiariesSubsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financialstatements from the date that control commences until the date that control ceases.Consistent accounting policies are applied to like transactions and events in similar circumstances. Losses applicable to the noncontrollinginterests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling intereststo have a deficit balance.In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less accumulatedimpairment losses.(iii)Acquisitions of entities under amalgamationThe Company’s interests in Singapore Technologies Aerospace Ltd, Singapore Technologies Electronics Limited, SingaporeTechnologies Kinetics Ltd, and Singapore Technologies Marine Ltd (collectively referred to as the “Scheme Companies”) resulted fromthe amalgamation of the Scheme Companies pursuant to a scheme of arrangement under Section 210 of the Companies Act, Chapter50 in 1997.As the amalgamation of the Scheme Companies constitutes a uniting of interests, the pooling of interests method has been adopted inthe preparation of the consolidated financial statements in connection with the amalgamation.Under the pooling of interests method, the combined assets, liabilities and reserves of the pooled enterprises are recorded at theirexisting carrying amounts at the date of amalgamation. The excess or deficiency of amount recorded as share capital issued (plus anyadditional consideration in the form of cash or other assets) over the amount recorded for the share capital acquired is recorded asmerger reserve.(iv)Loss of controlUpon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the othercomponents of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. Ifthe Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset, depending on the level ofinfluence retained.(v)Investments in associates and jointly controlled entities (equity-accounted investees)Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of the entity. Jointlycontrolled entities are those entities over whose activities the Group has joint control, established by contractual agreement andrequiring unanimous consent for strategic financial and operating decisions.Investments in associates and jointly controlled entities are accounted for by the Group using the equity method and are recognisedinitially at cost.
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 (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.
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