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BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
2. Summaryof significant accounting policies (cont’d)
2.15 Financial liabilities
Initial recognition andmeasurement
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual
provisions of the financial instrument. TheGroup determines the classification of its financial liabilities at initial
recognition.
All financial liabilities are recognised initially at fair value plus and in the case of financial liabilities not at fair
value through profit or loss, directly attributable transaction costs.
Subsequent measurement
Themeasurement of financial liabilities depends on their classification as follows:
(a)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition at fair value through profit or loss. Financial
liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term.
This category includes derivative financial instruments entered into by theGroup that are not designated
as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as
held for trading unless they are designated as effective hedging instruments.
Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at
fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised
in profit or loss.
TheGroup has not designated any financial liabilities upon initial recognition at fair value through profit
or loss.
(b)
Other financial liabilities
After initial recognition, other financial liabilities are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
2. Summaryof significant accounting policies (cont’d)
2.15 Financial liabilities (cont’d)
De-recognition
Afinancial liability is derecognisedwhen theobligation under the liability is dischargedor cancelledor expires.
When an existing financial liability is replacedby another from the same lender on substantially different terms,
or the terms of an existing liability are substantiallymodified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognised in profit or loss.
2.16 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the
activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing
costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended
use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connectionwith the borrowing of funds.
2.17 Provisions
General
Provisions are recognisedwhen theGroup has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of economic resources embodying economic benefits will be required to
settle the obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of economic resources will be required to settle the obligation, the provision is
reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax
rate that reflects, where appropriate, the risks specific to the liability.When discounting is used, the increase in
the provision due to the passage of time is recognised as a finance cost.
Warranty provision
Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial
recognition is based on historical experience. The initial estimate of warranty-related cost is revised annually.
for the financial year ended 31december 2012
for the financial year ended 31december 2012
notestothe
financialstatements
notestothe
financialstatements
