Creative 2011 Annual Report Download - page 23

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CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
For the nancial year ended 30 June 2011
These notes form an integral part of and should be read in conjunction with the accompanying nancial statements.
1. GENERAL INFORMATION
Creative Technology Ltd. (the “Company”) is listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”)
and incorporated and domiciled in Singapore. The address of its registered ofce is:
31 International Business Park
Creative Resource
Singapore 609921.
The principal activities of the Company and its subsidiaries consist of the design, manufacture and distribution of digitised
sound and video boards, computers and related multimedia and personal digital entertainment products.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
These nancial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The
nancial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies
below.
The Group and the Company conduct a substantial portion of its business in United States dollars (“US$” or “$”). All
dollar amounts included in the nancial statements and in the notes herein are United States dollars unless designated as
Singapore dollars (“S$”). The Group and the Company operate on a thirteen week calendar closing on the Friday closest
to the natural calendar quarter. The Group’s nancial year 2011 ended on 1 July 2011, the Friday nearest to 30 June 2011,
while the prior nancial year ended on 2 July 2010. All nancial years are described by their natural calendar dates.
The preparation of nancial statements in conformity with FRS requires management to exercise its judgement in the process
of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions.
Areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signicant to
the nancial statements, are disclosed in Note 3.
There are no new or amended Standards and Interpretations effective in 2011 which are relevant to the Group.
2.2 Group accounting
(a) Subsidiaries
Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the nancial and
operating policies, generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity.
The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the dates
of exchange, plus costs directly attributable to the acquisition. Identiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition, irrespective
of the extent of non-controlling interests. Please refer to the paragraph “Intangible assets – Goodwill on acquisitions” for
the accounting policy on goodwill on acquisition of subsidiaries.
Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from
the date on which control ceases.
In preparing the consolidated nancial statements, transactions, balances and unrealised gains on transactions between