Bradken Limited Annual Report 2015 - page 68

Notes to the consolidated financial statements
30 June 2015
2 Summary of significant accounting policies (continued)
(d) Foreign currency translation
Functional currency and presentation currency
(ii) Transactions and balances
(iii) Group companies
(e) Revenue recognition
Sale of goods
(ii) Contract revenue
(iii) Interest income
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also
recognised in other comprehensive income or profit or loss, respectively).
Where the outcome of a contract cannot be reliably estimated, contract costs are expensed as incurred. Where it is probable
that the cost will be recovered, revenue is recognised to the extent of costs incurred. Where it is probable that a loss will arise
on a contract, the excess of total costs over revenue is recognised immediately as an expense.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
Contract revenue and expenses are recognised on an individual contract basis using the percentage of completion method
when the stage of contract completion can be reliably determined, costs to date can be clearly identified, and total contract
revenue and costs to complete can be reliably estimated.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings
and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange
differences are reclassified to profit or loss, as part of the gain or loss on sale.
all resulting exchange differences are recognised in other comprehensive income.
income and expenses for each income statement and statement of comprehensive income are translated at average
exchange rates (unless this 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 at the dates of the transactions); and
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:
Revenue from the sale of goods is recognised when the consolidated entity has passed the significant risks and rewards to the
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollars, which is Bradken Limited’s functional and presentation currency.
Interest income is recognised as it accrues, taking into account the effective yield on the financial asset.
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for the major business
activities as follows:
The stage of completion is measured by reference to an assessment of components completed to date as a percentage of the
total components for each contact, or measured by reference to an assessmetn of the percentage of costs incurred to date, as
a percentage of the total contract costs.
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