Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

86
Notes to the Financial Statements
For the fi nancial year ended 31 December 2011
2. Summary of signifi cant accounting policies (contd.)
2.6 Foreign currency (contd.)
(b) Foreign currency transactions (contd.)
Exchange differences arising on the settlement of monetary items or on translating monetary items at
the reporting date are recognised in profi t or loss except for exchange differences arising on monetary
items that form part of the Group’s net investment in foreign operations, which are recognised initially
in other comprehensive income and accumulated under foreign currency translation reserve in equity.
The foreign currency translation reserve is reclassifi ed from equity to profi t or loss of the Group on
disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are
included in profi t or loss for the period except for the differences arising on the translation of nonmonetary
items in respect of which gains and losses are recognised directly in equity. Exchange
differences arising from such non-monetary items are also recognised directly in equity.
(c) Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rates of exchange ruling
at the reporting date and income and expenses are translated at exchange rates at the dates of
the transactions. The exchange differences arising on the translation are taken directly to other
comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in
other comprehensive income and accumulated in equity under foreign currency translation reserve
relating to that particular foreign operation is recognised in the profi t or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as
assets and liabilities of the foreign operations and are recorded in the functional currency of the
foreign operations and translated at the closing rate at the reporting date.
2.7 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property,
plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefi ts
associated with the item will fl ow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment, except for freehold land, are measured at cost
less accumulated depreciation and accumulated impairment losses. When signifi cant parts of property,
plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual
assets with specifi c useful lives and depreciation, respectively. Likewise, when a major inspection is
performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the
recognition criteria are satisfi ed. All other repair and maintenance costs are recognised in profi t or loss as
incurred.
Certain items of property, plant and equipment of the Group have not been revalued since 1996. The directors
have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded.
As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these
assets continue to be stated at their 1996 valuation less accumulated depreciation. The above transitional
provisions are available only on the fi rst application of the MASB Approved Accounting Standard IAS 16
(Revised): Property, Plant and Equipment which is effective for periods ending on or after 1 September
1998. By virtue of this transitional provision, an entity that had recorded its property, plant and equipment
at revalued amounts but had not adopted a policy of revaluation has been allowed to continue carrying
those assets on the basis of their previous revaluations subject to continuity in its depreciation policy and
the requirement to write down the assets to their recoverable amounts for impairment adjustments. The
transitional provisions will remain in force until and unless the entity chooses to adopt a revaluation policy in
place of a cost policy. When that happens, FRS 116 (which supersedes IAS 16) would require revaluations
to be carried out at regular intervals.
Cahya Mata Sarawak Berhad