CPA Annual Report : CPA Annual report 2012
o. Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of the Institute and its subsidiaries are measured using the currency of the primary environment in which the Institute and its subsidiaries operate respectively (the functional currency). ese financial statements are presented in Hong Kong dollars, which is the Institute's functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency at the exchange rates ruling at the transaction dates. Monetary items denominated in foreign currencies are translated into the functional currency at the rate of exchange prevailing at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. 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 determined. All exchange differences are recognized in surplus or deficit. For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated into Hong Kong dollars at the rate of exchange prevailing at the end of the reporting period, their income and expenses are translated at the average exchange rates for the period, and the resulting exchange differences are included in exchange reserve. On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation recognized in exchange reserve and accumulated in a separate component of equity is reclassified from equity to surplus or deficit when the gain or loss on disposal is recognized. p. Revenue recognition Revenue is recognized when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably. Annual subscription fees are recognized on a straight-line basis over the subscription period. First registration fees are recognized on entitlement. Other fees, income from examinations, seminars and courses, member and student activities and accreditation income are recognized upon completion of services provided. Interest income from bank deposits and savings accounts is recognized as it accrues using the effective interest method. q. Income tax Income tax expense represents the sum of the tax currently payable and deferred tax. e tax currently payable is based on taxable surplus for the period. Taxable surplus differs from surplus as reported in surplus or deficit because it excludes items of income or expenses that are taxable or deductible in other periods and it further excludes items that are not taxable or deductible. e Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the end of the reporting period.