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EC World Real Estate Investment Trust ANNUAL REPORT 2016
NOTES TO THE
Financial Statements
For the Financial Year ended 31 December 2016
2.
Significant accounting policies (continued)
2.13 Fair value estimation of financial assets and liabilities (continued)
The fair values of currency forwards are determined using actively quoted forward exchange rates. The fair values
of interest rate swaps are calculated as the present value of the estimated future cash flows discounted at actively
quoted interest rates.
The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying
amounts.
2.14 Operating leases
When the Group is a lessor:
Leases of investment properties where the Group retains substantially all risks and rewards incidental to ownership
are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees)
is recognised in the Statement of Total Return on a straight-line basis over the period of the lease.
2.15 Currency translation
(a) Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the currency of
the primary economic environment in which the entity operates (“functional currency”). The consolidated
financial statements are presented in Singapore Dollars, which is the functional currency of ECW.
(b) Transactions and balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into the
functional currency using the exchange rates prevailing at the dates of the transactions. Currency exchange
differences resulting from the settlement of such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at the closing rates at the reporting date are recognised
in the Statement of Total Return. However, in the consolidated financial statements, currency translation
differences on the arising from borrowings in foreign currencies and investment in foreign operations, are
recognised in the foreign currency translation reserve within the Statements of Movements in Unitholders’
Funds of the Group.
When a foreign operation is disposed of or any loan forming part of the net investment of the foreign
operation is repaid, a proportionate share of the accumulated currency translation differences is reclassified
to the Statement of Total Return, as part of the gain or loss on disposal.