FRASERS HOSPITALITY TRUST ANNUAL REPORT 2015
149
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 20 JUNE 2014 (DATE OF CONSTITUTION) TO 30 SEPTEMBER 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Basis of consolidation and business combinations (cont’d)
(e)
Property acquisition and business combinations
Where the property is acquired, via corporate acquisitions or otherwise, the Manager considers the
substance of the assets and activities of the acquired entity in determining whether the acquisition
represents the acquisition of a business.
The Stapled Group accounts for an acquisition as business combination where an integrated set of
activities is acquired in addition to the property. More specifically, consideration is made of the extent
to which significant processes are acquired and, in particular, the extent of services provided by the
subsidiary (e.g. maintenance, cleaning, security, bookkeeping, hotel operations, etc.).
When acquisitions of subsidiaries is not judged to be an acquisition of a business, they are not treated as
business combinations. Rather, the cost to acquire the corporate entity is allocated between the assets
and liabilities of the acquired entity based on their relative fair values at the acquisition date, and no
goodwill or deferred tax is recognised.
2.5 Foreign currencies
(a)
Functional and presentation currency
Items included in the financial statements of each entity in the Stapled Group are measured using the
currency that best reflects the economic substance of the underlying events and circumstances relevant
to the entity (the “functional currency”). The financial statements of FH-REIT Group, FH-BT and the
Stapled Group are presented in Singapore dollars, which is the functional currency of FH-REIT, FH-BT
and the Stapled Group.
(b)
Foreign currency transactions and balances
Transactions in foreign currencies are measured in the respective functional currencies of each entity
at rates of exchange approximating those ruling at the transaction dates. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are revalued at the rates ruling at the reporting
date.
Non-monetary items measured at historical cost in a foreign currency are recorded using the exchange
rates ruling at the date of the initial transaction dates. Non-monetary assets and liabilities measured
at fair value in a foreign currency are revalued using the exchange rates at the date that the fair value
was measured. Foreign currency differences arising on the settlement of monetary items or revaluing
monetary items are recognised in the Statements of Total Return, except for exchange differences
arising from monetary items that form part of the Trust’s net investment in foreign subsidiaries, which are
recognised initially in other comprehensive income and accumulated under foreign currency translation
reserve in Stapled Securityholders’ Funds and recognised in the Statements of Total Return on disposal
of the subsidiary.
