Powering growth - Aztech Group Ltd - Investor Relations

60a z t e c h a n n u a l r e p o r t 2 0 0 9F i n a n c i a l S t a t e m e n t s2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities andwhen they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on anet basis. Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debitedoutside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised directly outside profitor loss (either in other comprehensive income or directly in equity, respectively), or where they arise from the initial accounting for a businesscombination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of theacquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - The individual financial statements of each Group entity are measured andpresented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financialstatements of the Group, the statement of financial position and the statement of changes in equity of the Company are presented in Singaporedollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recordedat the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreigncurrencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominatedin foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that aremeasured in terms of historical cost in a foreign currency are not retranslated.Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss forthe period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for theperiod except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly inother comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in othercomprehensive income.Exchange differences which relate to assets under construction for future productive use, are included in the cost of those assets where they areregarded as an adjustment to interest costs on foreign currency borrowings.For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including comparatives)are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (includingcomparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period,in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in othercomprehensive income and accumulated in a separate component of equity. On the disposal of a foreign operation, the cumulative amount of theexchange differences relating to that foreign operation accumulated in a separate component of equity, shall be reclassified from equity to profitor loss (as a reclassification adjustment) when the gain or loss is recognised.On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, insubstance, form part of the net investment in foreign entities) are recognised in other comprehensive income and accumulated in foreign currencytranslation reserve (attributed to minority interest, as appropriate).Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operationand translated at the closing rate.CASH AND CASH EQUIVALENTS - Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquidinvestments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.