50
TEHO INTERNATIONAL INC LTD.
Annual Report 2015
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments (cont’d)
(ii) Non-derivative financial liabilities (cont’d)
Financial liabilities for contingent consideration payable in a business combination are
initially measured at fair value. Subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss.
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 liabilities into the other financial liabilities
category. Such financial liabilities are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortised cost using the effective interest method.
Other financial liabilities comprise loans and borrowings, and trade and other
payables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to
the issue of ordinary shares are recognised as a deduction from equity, net of any
tax effects.
(iv) Derivative financial instruments
When a derivative financial instrument is not designated in a hedge relationship that
qualifies for hedge accounting, the derivative is recognised initially at fair value and any
attributable transaction costs are recognised in profit or loss as incurred. Subsequent to
initial recognition, all changes in its fair value are recognised immediately in profit or loss.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments (cont’d)
(v) Intra-group financial guarantees in the separate financial statements
Financial guarantees are financial instruments issued by the Company that require
the issuer to make specified payments to reimburse the holder for the loss it incurs
because a specified debtor fails to meet payment when due in accordance with the
original or modified terms of a debt instrument.
Financial guarantees are recognised initially at fair value and are classified as financial
liabilities. Subsequent to initial measurement, the financial guarantees are stated
at the higher of the initial fair value less cumulative amortisation and the amount
that would be recognised if they were accounted for as contingent liabilities. When
financial guarantees are terminated before their original expiry date, the carrying
amount of the financial guarantee is transferred to profit or loss.
3.4 Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses except for leasehold buildings
which are stated at their revalued amounts. The revalued amount is the fair value at the
date of revaluation less any subsequent accumulated depreciation and subsequent
accumulated impairment losses. Revaluations are carried out by independent
professional valuers regularly such that the carrying amount of these assets does
not differ materially from that which would be determined using fair values at the
reporting date. Any accumulated depreciation at the date of revaluation is eliminated
against the gross carrying amount of the asset, and the net amount is restated to the
revalued amount of the asset.
Any increase in the revaluation amount is credited to the other comprehensive income
and shown as revaluation reserve in equity. Decreases that offset previous increases
of the same asset are charged in other comprehensive income and debited against
revaluation reserve directly in equity; all other decreases are charged to the profit or
loss. Each year the difference between depreciation based on the revalued carrying
amount of the asset charged to the profit or loss, and depreciation based on the
asset’s original cost is transferred from revaluation reserve to retained earnings.
NOTES TO THE
FINANCIAL STATEMENTS
Year ended 30 June 2015
