NewWorld Development Company Limited
FINANCIAL SECTION
128
3 PRINCIPAL ACCOUNTING POLICIES
(continued)
(aa) Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the “functional currency”).
The financial statements are presented in Hong Kong dollar, which is the Company’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of monetary assets and liabilities denominated
in foreign currencies at the exchange rates ruling at the end of the reporting period are recognised in the
consolidated income statement.
Changes in the fair value of monetary securities denominated in foreign currency classified as available-
for-sale are analysed between translation differences resulting from changes in the amortised cost of
the security and other changes in the carrying amount of the security. Translation differences related to
changes in the amortised cost are recognised in profit or loss, and other changes in the carrying amount
are recognised in equity.
Translation differences on financial assets and liabilities held at fair value through profit or loss is reported
as part of the fair value gain or loss. Translation differences on non-monetary available-for-sale financial
assets are included in equity.
(iii) Group companies
The results and financial position of all the Group entities that have a functional currency different from
the presentation currency are translated into the presentation currency as follows:
(1) assets and liabilities for each consolidated statement of financial position presented are translated at
the exchange rate ruling at the date of that consolidated statement of the financial position;
(2) income and expenses for each consolidated income statement are translated at the average
exchange rate during the period covered by the consolidated income statement;
(3) all resulting exchange differences are recognised as a separate component of equity; and
(4) on the disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss
of control over a subsidiary that includes a foreign operation, all of the exchange differences
accumulated in equity in respect of that operation attributable to the equity holders of the company
are reclassified to profit or loss.
In the case of a partial disposal that does not result in the Group losing control over a subsidiary that
includes a foreign operation, the proportionate share of accumulated exchange differences are re-
attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals
(that is, reductions in the Group’s ownership interests in associated companies or joint ventures that
do not result in the Group losing significant influence or joint control) the proportionate share of the
accumulated exchange difference is reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the exchange rate ruling at the end of the reporting period.
