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ANNUAL REPORT 2014
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.2 Foreign currencies (cont'd)
Hedge of net investment in foreign operation
The H-REIT Group and the Stapled Group apply hedge accounting to foreign currency differences arising
between the functional currency of the foreign operation and the H-REIT’s functional currency (Singapore
dollars), regardless of whether the net investment is held directly or through an intermediate parent.
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net
investment in a foreign operation are recognised directly in foreign currency translation reserve in unitholders’
funds to the extent that the hedge is effective. To the extent that the hedge is ineffective, such differences
are recognised in the statement of total return. When the hedged net investment is disposed of, the relevant
amount in the foreign currency translation reserve is transferred to the statement of total return as part of the
profit or loss on disposal.
3.3 Property, plant and equipment
Recognition and measurement
Owner’s occupied property is classified as property, plant and equipment. All items of property, plant and
equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost
includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is
integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment (calculated as the difference
between the net proceeds from disposal and the carrying amount of the item) is recognised in the statement
of comprehensive income and statement of total return.
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will flow
to the Stapled Group, and its cost can be measured reliably. The carrying amount of the replaced component
is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the
statement of comprehensive income and statement of total return as incurred.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed and if a component has a useful life that is different from the remainder of that asset, that
component is depreciated separately.
Depreciation is recognised as an expense in the statement of comprehensive income and statement of total
return on a straight-line basis over the estimated useful lives of each component of an item of property, plant
and equipment, unless it is included in the carrying amount of another asset. Freehold land is not depreciated.
Depreciation is recognised from the date that the property, plant and equipment are installed and are ready
for use.
NOTES TO THE FINANCIAL STATEMENTS
