Kia 2015 Annual Report Download - page 80

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(u) Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies of the Company entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the reporting date’s
exchange rate. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined. 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.
Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on a financial liability designated as
a hedge of the net investment in a foreign operation, or qualifying cash flow hedges, which are recognized in other comprehensive income. Also,
foreign currency differences arising on settlement of Monetary assets and liabilities are recognized in profit or loss.
The assets and liabilities of foreign operations are translated to presentation currency at exchange rates at the reporting date. The income and
expenses of foreign operations are translated to presentation currency at exchange rates at the dates of the transactions. Foreign currency differences
are recognized in other comprehensive income.
(v) Equity capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized as a
deduction from equity, net of any tax effects.
When the Company repurchases its share capital, the amount of the consideration paid is recognized as a deduction from equity and classified as
treasury shares. The profits or losses from the purchase, disposal, reissue, or retirement of treasury shares are not recognized as current profit or loss. If
the Company acquires and retains treasury shares, the consideration paid or received is directly recognized in equity.
(w) Revenue
Revenue from sale of goods or the use by others of the Company assets is measured at the fair value of the consideration received or receivable, net
of returns, trade discounts, volume rebates and cash incentives to the customers.
Revenue from sales of vehicles, service parts and other related products is recognized when the Company has transferred to the buyer the significant risk
and rewards of ownership of the goods, the Company retains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the
transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Company accounts for sales of goods and services under Red Point Program as transactions with multiple revenue generation activities or
deliverables. The fair value of the consideration received or receivable in respect of the initial sale is allocated between the award credits (“Red Points”)
and the other components of the sale. The amount allocated to the Red Points is estimated by reference to the fair value of the points for which they
could be sold separately. Such amount is deferred and revenue is recognized only when the Red Points are redeemed and the Company has fulfilled its
obligations rather than the initial point of sales of goods and services.
Rental income from investment property is recognized in profit or loss on straight-line basis over the term of the lease.
(x) Finance income and finance costs
Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income except for dividend from
investment in associates, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through
profit or loss, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using
the effective interest method. Dividend income is recognized in profit or loss on the date that the Company’s right to receive payment is established,
which in the case of quoted securities is the ex-dividend date.
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and losses on hedging instruments that are
recognized in profit or loss. Interest expense of borrowings is recognized as it accrues in profit or loss, using the effective interest method.
74 | KIA MOTORS
December 31, 2015 and 2014
KIA MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS