Creative 2009 Annual Report Download - page 29

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CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES
(ii) Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction dates, in which case, income and expenses are translated
using the exchange rates at the dates of the transactions); and
(iii) All resulting currency translation differences are recognised in the income statement.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of
the foreign operations and translated at the closing rates at the date of the balance sheet.
2.20 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker.
2.21 Share capital and treasury shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are
deducted against the share capital account.
Where the Company’s ordinary shares are repurchased (“treasury shares”), the consideration paid, including any directly
attributable incremental cost, is presented as a component within equity attributable to the Company’s equity holders, until
they are cancelled, sold or reissued.
When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account
if the shares are purchased out of capital of the Company, or against the retained earnings of the Company if the shares are
purchased out of earnings of the Company.
When treasury shares are subsequently sold or reissued pursuant to the employee share option scheme, the cost of treasury
shares is reversed from the treasury share account and the realised gain or loss on sale or reissue, net of any directly
attributable incremental transaction costs and related income tax, is recognised as a change in equity of the Company.
2.22 Dividends to Company’s shareholders
Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.
3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
(a) Revenue recognition
Allowances are provided for estimated returns and discounts. Management analyses historical returns, current economic
trends and changes in customer demand and acceptance of its products when evaluating the adequacy of the sales returns
allowance. Such allowances are adjusted periodically to reflect actual and anticipated experience. When recognising
revenue, the Group records estimated reductions to revenue for customer and distributor programs and incentive offerings,
including price protection, promotions, other volume-based incentives and rebates. Significant management judgement and
estimates must be used in connection with establishing these allowances in any accounting period. The Group may take
action when necessary in response to market conditions to increase customer incentive offerings, possibly resulting in an
incremental reduction of revenue at the time the incentive is offered. The Group’s net revenue for the financial year ended
30 June 2009 was US$466,074,000 (2008: US$736,848,000).
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