Notes to the Consolidated Financial Statements  Cardno Limited and its Controlled Entities for the year ended 30 June 2010 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED  (c) Basis of Consolidation continued  Transactions eliminated on consolidation  (d) Goods and Services Tax  Intra-group balances, unrealised gains and losses and inter-entity balances resulting from transactions with or between  controlled entities are eliminated in full on consolidation.  Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the  amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as  part of the cost of acquisition of the asset or as part of the expense.  Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or  payable to, the ATO is included as a current asset or liability in the consolidated balance sheet.  Cash flows from operating activities are included in the cash flow statements on a gross basis. The GST components of  cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are  classified as operating cash flows.  Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange  rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting  date are translated to the functional currency at the foreign exchange rate at that date. The foreign currency gain or loss  on monetary items is the difference between amortised cost in the functional currency at the beginning of the period,  adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at  the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that  are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value  was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for  differences arising on the translation of available-for-sale equity instruments, a financial liability designated as a hedge of  the net investment in a foreign operation, or qualifying cash flow hedges, which are recognised in other comprehensive  income. 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.  (e) Foreign Currency Foreign currency transactions  Foreign operations  The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are  translated to Australian dollars at exchange rates at the reporting date. The revenue and expenses of foreign operations  are translated to Australian dollars at rates approximating the foreign exchange rates at the dates of the transactions.  Foreign currency differences are recognised in other comprehensive income in the foreign currency translation reserve  (FCTR). When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to  profit or loss.  Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the  settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment  in a foreign operation and are recognised in other comprehensive income and are presented within equity in the FCTR.  Foreign currency differences arising on the translation of a financial liability designated as a hedge of a net investment in  a foreign operation are recognised in other comprehensive income to the extent that the hedge is effective, and are  presented within equity in the FCTR. To the extent that the hedge is ineffective, such differences are recognised in profit  or loss. When the hedged part of a net investment is disposed of, the relevant amount in the FCTR is transferred to  profit or loss as part of the profit or loss on disposal.  Revenue is recognised at fair value of the consideration received net of the amount of goods and services tax (GST)  payable to the taxation authority.  Hedge of net investment in foreign operation  (f) Revenue Recognition  Page 32 of 80 