49
Annual Report 2015
TEHO INTERNATIONAL INC LTD.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.2 Foreign currency (cont’d)
(ii) Foreign operations (cont’d)
Foreign currency differences are recognised in other comprehensive income and
presented in the foreign currency translation reserve (translation reserve) in equity.
However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant
proportionate share of the translation difference is allocated to the non-controlling
interests. When a foreign operation is disposed of such that control or significant
influence is lost, the cumulative amount in the translation reserve related to that
foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
3.3 Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are
originated. All other financial assets (including assets designated at fair value through
profit or loss) are recognised initially on the trade date, which is the date that the
Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash
flows from the asset expire, or it transfers the rights to receive the contractual cash
flows on the financial asset in a transaction in which substantially all the risks and
rewards of ownership of the financial asset are transferred, or it neither transfers nor
retains substantially all of the risks and rewards of ownership and does not retain
control over the transferred asset. Any interest in transferred financial assets that is
created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement
of financial position when, and only when, the Group has a legal right to offset the
amounts and intends either to settle on a net basis or to realise the asset and settle
the liability simultaneously.
The Group classifies non-derivative financial assets into the following categories:
loans and receivables.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments (cont’d)
(i) Non-derivative financial assets (cont’d)
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are recognised initially at fair value
plus any directly attributable transaction costs. Subsequent to initial recognition,
loans and receivables are measured at amortised cost using the effective interest
method, less any impairment losses.
Loans and receivables comprise cash and cash equivalents, and trade and other
receivables (excluding prepayments).
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with
maturities of three months or less from the acquisition date that are subject to an
insignificant risk of changes in their fair value, and are used by the Group in the
management of its short-term commitments. For the purpose of the statement of
cash flows, pledged deposits are excluded whilst bank overdrafts that are repayable
on demand and that form an integral part of the Group’s cash management are
included in cash and cash equivalents.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on
the date that they are originated. Financial liabilities for contingent consideration
payable in a business combination are recognised at the acquisition date. All other
financial liabilities (including liabilities designated at fair value through profit or loss) are
recognised initially on the trade date, which is the date that the Group becomes a
party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are
discharged, cancelled or expire.
NOTES TO THE
FINANCIAL STATEMENTS
Year ended 30 June 2015
