FRENCKEN GROUP LIMITED
ANNUAL REPORT 2015
60
NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(f) Currency translation (Cont’d)
(iii) Translation of Group entities’ financial statements
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:
(a)
Assets and liabilities for each balance sheet presented are translated at the closing rate at the date
of the balance sheet;
(b)
Income and expenses are translated at average exchange rate (unless the 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 using the exchange rates at the dates of
the transactions); and
(c)
All resulting exchange differences are taken to the foreign currency translation reserve within
other comprehensive income. This is a non-distributable reserve. Movements in this reserve account
are set out in consolidated statement of changes in equity.
(g) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and rendering
of services, net of rebates, discounts and sales related taxes, and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue and related cost can be reliably measured, when it
is probable that the collectibility of the related receivables is reasonably assured and when the specific criteria for
each of the Group’s activities are met as follows:
(i)
Sale of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the
goods are transferred to the buyer and collectibility of the related receivables is reasonably assured.
Revenue from the design and fabrication of moulds is recognised on the percentage of completion
method. Percentage of completion is measured by reference to the completion of certain pre-determined
milestones as certified by engineers.
(ii)
Rendering of services
Revenue from rendering of services is recognised when the services are rendered.
(iii) Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
(iv) Dividend income
Dividend income is recognised when the right to receive payment is established.
