I
annual report 2014
Notes to the Financial Statements
31 December 2014 (Cont’d)
68
4.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
4.8 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability
or equity instrument of another enterprise.
A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to
receive cash or another financial asset from another enterprise, or a contractual right to exchange financial
assets or financial liabilities with another enterprise under conditions that are potentially favourable to the
Group.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to
another enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another
enterprise under conditions that are potentially unfavourable to the Group.
Financial instruments are recognised on the statements of financial position when the Group has become a
party to the contractual provisions of the instrument. At initial recognition, a financial instrument is recognised
at fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs
that are directly attributable to the acquisition or issuance of the financial instrument.
An embedded derivative is separated from the host contract and accounted for as a derivative if, and only
if the economic characteristics and risks of the embedded derivative is not closely related to the economic
characteristics and risks of the host contract, a separate instrument with the same terms as the embedded
derivative meets the definition of a derivative, and the hybrid instrument is not measured at fair value through
profit or loss.
(a)
Financial assets
A financial asset is classified into the following four (4) categories after initial recognition for the purpose
of subsequent measurement:
(i)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise financial assets that are held for trading
(i.e. financial assets acquired principally for the purpose of resale in the near term), derivatives
(both, freestanding and embedded) and financial assets that were specifically designated into this
classification upon initial recognition.
Subsequent to initial recognition, financial assets classified as fair value through profit or loss are
measured at fair value. Any gains or losses arising from changes in the fair value of financial assets
classified as fair value through profit or loss are recognised in profit or loss. Net gains or losses
on financial assets classified as fair value through profit or loss exclude foreign exchange gains
and losses, interest and dividend income. Such income is recognised separately in profit or loss
as components of other income or other operating losses.
However, derivatives that is linked to and must be settled by delivery of unquoted equity instruments
that do not have a quoted market price in an active market are recognised at cost.
(ii)
Held-to-maturity investments
Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed
or determinable payments and fixed maturity that the Group has the positive intention and ability
to hold to maturity.
Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at
amortised cost using the effective interest method. Gains or losses on financial assets classified
as held-to-maturity are recognised in profit or loss when the financial assets are derecognised or
impaired, and through the amortisation process.
