NOTES TO FINANCIAL STATEMENTS
30 June 2015
Annual Report 2015
Karin Technology Holdings Limited
73
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
BORROWING COSTS
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of
funds. All borrowing costs are expensed in the period in which they are incurred.
DIVIDENDS
Interim dividends are proposed and declared, because the Company’s bye-laws grant the directors of the Company
the authority to declare interim and special dividends. Consequently, interim and special dividends are recognised
immediately as a liability when they are proposed and declared. Final dividends are recognised as a liability when
they have been approved by the shareholders in a general meeting and declared.
FOREIGN CURRENCIES
These financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation
currency. Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency. Foreign currency transactions recorded
by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the
functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement
or translation of monetary items are recognised in profit or loss.
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 was measured. The gain or loss
arising on translation of a non-monetary item measured at fair value is treated in line with recognition of the
gain or loss on change in fair value of the item (i.e., transaction difference on the item whose fair value gain
or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive
income or profit or loss, respectively).
The functional currencies of certain overseas and Mainland China subsidiaries and an associate are currencies other
than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are
translated into Hong Kong dollars at the exchange rates prevailing at the end of the reporting period and their
statements of profit or loss and other comprehensive income are translated into Hong Kong dollars at the weighted
average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive
income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component
of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.
For the purpose of the consolidated statement of cash flows, the cash flows of overseas and Mainland China
subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows.
Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong
Kong dollars at the weighted average exchange rates for the year.
