2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.3
Standards issued but not yet effective (continued)
Key issues for the Group include identifying performance obligations, accounting for contract
modifications, applying the constraint to variable consideration, evaluating significant financing
components, measuring progress toward satisfaction of a performance obligation, recognising contract
cost assets and addressing disclosure requirements.
Either a full or modified retrospective application is required for annual periods beginning on or after
1 January 2018 with early adoption permitted. The Group is currently assessing the impact of FRS
115 and plans to adopt the new standard on the required effective date.
FRS 109 introduces new requirements for classification and measurement of financial assets,
impairment of financial assets and hedge accounting. Financial assets are classified according to
their contractual cash flow characteristics and the business model under which they are held. The
impairment requirements in FRS 109 are based on an expected credit loss model and replace the FRS
39 incurred loss model. Adopting the expected credit losses requirements will require the Group to
make changes to its current systems and processes.
The Group currently measures one of its investments in unquoted equity securities at cost. Under FRS
109, the Group will be required to measure the investment at fair value. Any difference between the
previous carrying amount and the fair value would be recognised in the opening retained earnings
when the Group apply FRS 109. FRS 109 is effective for annual periods beginning on or after 1
January 2018 with early application permitted. Retrospective application is required, but comparative
information is not compulsory. The Group is currently assessing the impact of FRS 109 and plans to
adopt the standard on the required effective date.
2.4
Basis of consolidation and business combinations
(a)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company
and its subsidiaries as at the end of the reporting period. The financial statements of the
subsidiaries used in the preparation of the consolidated financial statements are prepared for
the same reporting date as the Company. Consistent accounting policies are applied to like
transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from
intra-group transactions and dividends are eliminated in full.
55
HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
