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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.4 Foreign Currency Translation
The consolidated financial statements are presented in USD, which is also the Holding’s functional and presentation currency. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured using that functional currency. The USD is used to a significant extent, or has a significant impact on
the operations of the Group and reflects the economic substance of the underlying events and circumstances relevant to the Group. Therefore, the Group companies mainly use USD as
functional currency. All currencies other than the functional currency selected for measuring items in the financial statements are treated as foreign currencies.
Based on the economic substance of the underlying events and circumstances relevant to the Group, the functional currency of certain subsidiaries of the Group has been determined
to be USD as defined by IAS 21,
The Effects of Changes in Foreign Exchange Rates
due to the following reasons:
• The purchase and sales prices of the Group companies and the main services and products are mainly quoted in USD,
• A significant part of the financing and related finance costs of the Group is denominated in USD.
Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies
are translated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to translation gain / (loss) in the consolidated income statement.
Non-monetary items and equity balances (excluding profit or loss) that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the
dates of the initial transactions.
As at the reporting date, the assets and liabilities of subsidiaries are translated into the presentation currency of Borusan Holding A.Ş. (USD) at the rate of exchange ruling at the balance
sheet date and their income statements are translated at the average exchange rates for the year.
The exchange differences arising on the translation are taken directly to a separate component of other comprehensive income as currency translation reserve. On disposal of such
subsidiaries, the deferred cumulative amount recognised in other comprehensive income relating to that particular subsidiary is recognised in the statement of comprehensive income.
The Turkish countrywide producer price index (PPI) published by Turkish Statistical Institute and TL exchange rates for the purchases of USD announced by the Central Bank of the
Republic of Turkey for the last three years were as follows:
3.5 Business combinations
The acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which
is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity
interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.
Year
2011
2012
2013
2014
Year End TL/USD
Exchange Rates
1.8889
1.7826
2.1343
2.3189
TL/USD Rate Annual Change
Inflation Rates (PPI)
22.18
(5.63)
19.73
8.65
%
13.33
6.16
7.4
8.17
BORUSAN HOLDING A.Ş. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014
(Currency - US Dollars (“USD”) unless otherwise indicated)