46
TEHO INTERNATIONAL INC LTD.
Annual Report 2015
2 BASIS OF PREPARATION (CONT’D)
2.4 Use of estimates and judgements (cont’d)
Measurement of fair values (cont’d)
When measuring the fair value of an asset or a liability, the Group uses market observable
data as far as possible. Fair values are categorised into different levels in a fair value
hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised
in different levels of the fair value hierarchy, then the fair value measurement is categorised
in its entirety in the same level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement (with Level 3 being the lowest).
The Group recognises transfers into and out of fair value hierarchy levels as of the date of
the event or change in circumstances that caused the transfer.
Further information about the assumptions made in measuring fair values is included in the
following notes:
• Note 4
Property, plant and equipment; and
• Note 28
Financial instruments.
2 BASIS OF PREPARATION (CONT’D)
2.5 Changes in accounting policies
(i) Subsidiaries
As a result of FRS 110
Consolidated Financial Statements
, the Group has changed
its accounting policy for determining whether it has control over and consequently
whether it consolidates its investees. FRS 110 introduces a new control model that
focuses on whether the Group has power over an investee, exposure or rights to
variable returns from its involvement with the investee and ability to use its power to
effect those returns.
In accordance with the transitional provision of FRS 110, the Group reassessed
the control for its investees at 1 July 2014. There were no changes to the control
conclusion in respect of the investments in subsidiaries and accordingly, there has
been no impact on the recognised assets, liabilities, profit or loss and comprehensive
income of the Group.
(ii) Disclosure of interests in other entities
From 1 July 2014, as a result of FRS 112
Disclosure of Interests in Other Entities
, the
Group has expanded its disclosures about its interests in subsidiaries (see Note 6 and
Note 14) and associates (see Note 7).
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods
presented in these financial statements, and have been applied consistently by Group
entities, except as explained in note 2.5, which addresses changes in accounting policies.
3.1 Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method in accordance
with FRS 103
Business Combination
as at the acquisition date, which is the date on
which control is transferred to the Group.
NOTES TO THE
FINANCIAL STATEMENTS
Year ended 30 June 2015
