142
Annual Report
2013
Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries
Notes to the financial statements
21
Non-monetary assets and liabilities measured at cost in foreign currencies are translated to functional
currency using the foreign exchange rates ruling at the dates of the transactions.
Foreign currency differences arising on retranslation are generally recognized in profit or loss.
However, foreign currency differences arising from the retranslation of the following items are
recognized in other comprehensive income:
available-for-sale equity investments (except on impairment in which case foreign currency
differences that have been recognized in other comprehensive income are reclassified to profit or
loss);
a financial liability designated as a hedge of the net investment in a foreign operation to the extent
that the hedge is effective; or
qualifying cash flow hedges to the extent the hedge is effective.
Foreign operations
The assets and liabilities of foreign operation are translated to Thai Baht at the foreign exchange rates
ruling at the reporting date.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are stated at
exchange rates ruling on transaction dates / the reporting date
The revenues and expenses of foreign operation are translated to Thai Baht at rates approximating the
foreign exchange rates ruling at the dates of the transactions.
Foreign exchange differences arising on translation are recognised in other comprehensive income and
presented in the foreign currency translation reserve in equity until disposal of the investment.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither
planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a
monetary item are considered to form part of a net investment in a foreign operation and are
recognised in other comprehensive income, and presented in the foreign currency translation reserve
in equity until disposal of the investment.
(c) Derivative financial instruments
Derivative financial instruments are used to manage exposure to foreign exchange arising from
operational activities. Derivative financial instruments are not used for trading purposes. However,
derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
The Company uses financial instruments to reduce exposure in fluctuation of foreign currency
exchange risk. These instruments, which mainly comprise foreign currency forward contracts are not
recognised in the financial statement on inception.
Foreign currency forward contracts protect the Company from risks in fluctuation of exchange rates
by establishing the future exchange rate at which a foreign currency asset will be realised or a foreign
currency liability will be settled. Any increase or decrease in the amount required to realise the assets
or settle the liability is offset by a corresponding movement in the value of the forward exchange
contract. The gains and losses are therefore offset for financial reporting purposes and are not
recognised in the financial statements. The fee incurred in establishing each forward exchange
contract is charged to the statement of income in the period in which payment takes place.
otes to the financial statements
Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries
