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3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.2 Foreign currencies (cont’d)
Foreign operations (cont’d)
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely
in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form
part of a net investment in a foreign operation. These are recognised directly in the foreign currency translation reserve
in unitholders’ funds.
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.
NOTES TO THE FINANCIAL STATEMENTS
