NOTES
TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2016
(In Singapore dollars)
69
MTQ CORPORATION LIMITED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.27 Treasury shares
The Group’s own equity instruments, which are reacquired (treasury shares) are recognised at cost and deducted
from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s
own equity instruments. Any difference between the carrying amount of treasury shares and the consideration
received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are nullified for the
Group and no dividends are allocated to them respectively.
2.28 Hedge accounting
The Group applies hedge accounting for certain hedging relationships which qualify for hedge accounting.
At the inception of a hedging relationship, the Group formally designates and documents the hedging relationship
to which the Group wishes to apply hedge accounting and the risk management objective and strategy for
undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or
transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the
hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows
attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes
in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly
effective throughout the financial reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Hedges of net investments
Hedges of net investments in foreign operations, including a hedge of a monetary item that is accounted for as
part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging
instrument relating to the effective portion of the hedge are recognised as other comprehensive income while
any gains or losses relating to the ineffective portion are recognised in profit or loss. On disposal of the foreign
operation, the cumulative value of any such gains or losses recorded in equity is transferred to profit or loss.
The Group uses loans as a hedge of its exposure to foreign exchange risk on its investments in foreign subsidiaries.
The details on hedges of net investments are disclosed in Note 34.
