36 ANNUAL REPORT  2013  KATHMANDU Assets and liabilities for each balance sheet presented are  translated at the closing rate at the date of that balance sheet;  Income and expenses for each income statement are  translated at average exchange rates (unless this 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 at the rate on the dates of the  transactions); and The excess of the consideration transferred over the amount of  any non-controlling interest in the acquiree and the acquisition  date fair value of any previous equity interest in the acquiree  over the fair value of the Group’s share of the identifiable net  assets acquired is recorded as goodwill. If this is less than the  fair value of the net assets of the subsidiary acquired in the case  of a bargain purchase, the difference is recognised directly in the  income statement. Inter-company transactions, balances and unrealised gains  on transactions between Group companies are eliminated.  Unrealised losses are also eliminated. Accounting policies of  subsidiaries have been changed where necessary to ensure  consistency with the policies adopted by the Group. All resulting exchange differences are recognised as a separate  component of equity. On consolidation, exchange differences arising from the  translation of the net investment in foreign operations, and  of borrowings and other currency instruments designated  as hedges of such investments, are taken to shareholders’  equity. When a foreign operation is partially disposed of or sold,  exchange differences that were recorded in equity are recognised  in the income statement as part of the gain or loss on sale. The Group treats transactions with non-controlling interests as  transactions with equity owners of the Group. For purchases  from non-controlling interests, the difference between any  consideration paid and the relevant share acquired of the carrying  value of net assets of the subsidiary is recorded in equity. Gains  or losses on disposals to non-controlling interests are also  recorded in equity. Goodwill and fair value adjustments arising on the acquisition of  a foreign entity are treated as assets and liabilities of the foreign  entity and translated at the closing rate. An operating segment is a component of an entity that engages  in business activities which earns revenue and incurs expenses  and where the chief decision maker reviews the operating results  on a regular basis and makes decisions on resource allocation.  The Group is organised into three operating segments, depicting  the three geographical regions the Group operates in. Revenue comprises the fair value of the consideration received  or receivable for the sale of goods and services, excluding Goods  and Services Tax, rebates and discounts and after eliminating  sales within the Group. Revenue is recognised as follows: Sales of goods are recognised when a Group entity has delivered  a product to the customer. Retail sales are usually in cash or  by credit card. The recorded revenue is the gross amount of  sale (excluding GST), including credit card fees payable for the  transaction. Such fees are included in selling expenses. Items included in the financial statements of each of the  subsidiaries’ operations are measured using the currency of the  primary economic environment in which it operates (‘functional  currency’). The financial statements are presented in New  Zealand dollars, which is the Company’s functional currency and  Group’s presentation currency. Management fees are recognised in the accounting period in  which the services are rendered. Foreign currency transactions are translated into the functional  currency using the exchange rates prevailing at the dates of the  transaction. Foreign exchange gains and losses resulting from  the settlement of such transactions and from the translation  at year end exchange rates of monetary assets and liabilities  denominated in foreign currencies are recognised in the income  statement, except when deferred in equity as qualifying cash  flow hedges. Translation differences on monetary financial assets  and liabilities are reported as part of the fair value gain or loss. Interest income is recognised on a time-portion basis using the  effective interest method. Dividend income is recognised when the right to receive  payment is established. The results and financial position of all the Group entities (none  of which has the currency of a hyper-inflationary economy)  that have a functional currency different from the presentation  currency are translated into the presentation currency as follows: The tax expense for the year comprises current and deferred tax.  Tax is recognised in the income statement, except to the extent  that it relates to items recognised directly in equity. In this case,  the tax is also recognised in equity. (F) CURRENT AND DEFERRED INCOME TAX (ii) Group companies (iv) Dividend income (iii) Interest income (ii) Sales of services (i) Sales of goods (i) Functional and presentation currency (D) FOREIGN CURRENCY TRANSLATION (C) SEGMENT REPORTING (E) REVENUE RECOGNITION (ii) Transactions and non-controlling interests