NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
2. Summary of significant accounting policies (cont’d)
2.3 Standards issued but not yet effective (cont’d)
FRS 109 Financial Instruments
FRS 109 is effective for financial periods beginningonor after 1 January 2018. FRS 109 uses a single approach todeterminewhether
a financial asset is measured at amortised cost or fair value, replacing the many different rules in FRS 39. The approach in FRS 109
is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of
the financial assets, and enables companies to reflect their risk management activities better in their financial statements, and,
in turn, help investors to understand the effect of those activities on future cash flows. FRS 109 is principle-based, and will more
closely align hedge accounting with risk management activities undertaken by companies when hedging their financial and non-
financial risk exposures. The impairment requirements in FRS 109 are based on an expected credit loss model and replace the
FRS 39 incurred loss model.
The Directors are currently evaluating the impact of the changes and assessing whether the adoption of FRS 115 and FRS 109 will
have an impact on the Group.
2.4 Significant accounting judgments and estimates
The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent
liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result
in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future
periods.
(a) Judgments made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgments, apart
from those involving estimations, which have themost significant effect on the amounts recognised in the consolidated
financial statements:
(i)
Determination of functional currency
The Group measures foreign currency transactions in the respective functional currencies of the Company and
its subsidiaries. In determining the functional currencies of the entities in the Group, judgment is required to
determine the currency that mainly influences sales prices for goods and services and of the country whose
competitive forces and regulations mainly determines the sales prices of its goods and services. The functional
currencies of the entities in the Group are determined based on management’s assessment of the economic
environment in which the entities operate and the entities’ process of determining sales prices.
(b) Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each
reporting period are discussed below. The Group based its assumptions and estimates on parameters available when
the financial statements were prepared. Existing circumstances and assumptions about future developments, however,
may change due to market changes or circumstances arising beyond the control of the Group. Such changes are
reflected in the assumptions when they occur.
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