Creative 2015 Annual Report Download - page 31

31
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
the vesting date and recognises the impact of the revision of the estimates in prot or loss, with a corresponding adjustment
to share-based compensation reserves over the remaining vesting period.
When the options are exercised, the proceeds received (net of transaction costs) and the related balance previously recognised
in other reserves are credited to share capital account when new ordinary shares are issued, or to the “treasury shares”
account when treasury shares are re-issued to the employees.
Performance shares
The performance share plan contemplates the award of fully-paid ordinary shares, their equivalent cash value or combinations
thereof, free of charge, provided that certain prescribed performance targets are met and/or upon expiry of the prescribed
vesting periods.
The fair value of employee services received in exchange for the grant of the awards is recognised as a share-based
compensation expense in prot or loss with a corresponding increase in the share-based compensation reserves over the
vesting period. The amount is determined by reference to the fair value of the performance shares on the grant date.
If the performance target is a market condition, the probability of the performance target being met is taken into account
in estimating the fair value of the ordinary shares granted at the grant date. The compensation expense is charged to prot
or loss on a basis that fairly reects the manner in which the benets will accrue to the employee under the plan over the
prescribed vesting periods from date of grant. No adjustments to the amounts charged to prot or loss are made whether or
not the market condition is met.
For performance share grants with non-market conditions, the Company revises its estimates of the number of share grants
expected to vest and corresponding adjustments are made to prot or loss and share-based compensation reserves.
2.18 Currency translation
(a) Functional and presentation currency
Items included in the nancial statements of each entity in the Group are measured using the currency of the primary
economic environment in which the entity operates (“functional currency”). The functional currency of the Company is the
United States Dollar (“US$”), which reects the economic environment in which the activities of the Company are largely
exposed to. The nancial statements are presented in United States Dollar.
(b) Transactions and balances
Transactions in a currency other than the United States Dollar (“foreign currency”) are translated into the United States
Dollar using the exchange rates at the dates of the transactions. Currency translation differences from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates
at the balance sheet date are recognised in prot or loss.
Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates prevailing at the
date when the fair values are determined.
 (c) TranslationofGroupentities’nancialstatements
The results and nancial position of all the Group’s entities (none of which has the currency of a hyperinationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency by
way of assets and liabilities being translated at the closing exchange rates prevailing at the date of the balance sheet, and
income and expenses being 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).
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.