Page 83 - Neal and Massy Holdings Annual Report 2012

81 forward focused
2 Summary Of Significant Accounting Policies (continued)
2.4 Foreign currency translation (continued)
b) 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 at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the consolidated income statement.
Translation differences on non-monetary financial assets and liabilities, such as equities held at fair value through profit
or loss are recognised as part of the fair value gain or loss. Translation differences on non-monetary items such as equities
classified as available-for-sale financial assets are included in other reserves in equity.
Translation differences on debt securities and other monetary financial assets measured at fair value are included in
foreign exchange gains and losses.
c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date
of that statement of financial position;
ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not
a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions); and
iii) all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of
borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive
income. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the
consolidated income statement as part of the gain or loss on sale.
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 closing rate.
2.5 Property, plant and equipment
Property, plant and equipment including land and buildings are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance are charged to
the consolidated income statement during the financial period in which they are incurred.