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REPORTS
4 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
4.2 Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the entities in the HBT
Group, the H-REIT Group and the Stapled Group at the exchange rate at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at the reporting date. The foreign currency gain or loss on monetary items is the
difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective
interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate
at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated
to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary
items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at
the date of the transaction. Foreign currency differences arising on translation are recognised in the statement
of total return, except for differences arising on the translation of a financial liability designated as a hedge of
the H-REIT Group’s and the Stapled Group’s net investment in a foreign operation that is effective (see below),
which are recognised in unitholders’ funds directly.
Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at
the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange
rates prevailing at the dates of the transactions.
Foreign currency differences are recognised directly in the foreign currency translation reserve in unitholders’ funds.
When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative
amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss
or the statement of total return (as the case may be) as part of the gain or loss on disposal. When only part of
the interest in a subsidiary that includes a foreign operation is disposed of while retaining control, the relevant
proportion of the cumulative amount is reattributed to non-controlling interests.
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 translation 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.
NOTES TO THE FINANCIAL STATEMENTS
137
Annual Report 2016