BAKERTECHNOLOGYLIMITED
ANNUALREPORT2013
90
Notes to the
Financial Statements
for the financial year ended 31December 2013
2.
Summaryof significantaccounting policies (cont’d)
2.10
Financial instruments
(a)
Financial assets
Initial recognition andmeasurement
Financial assets are recognisedwhen, and only when, the Group becomes a party to the contractual provisions of the
financial instrument. TheGroup determines the classificationof its financial assets at initial recognition.
When financial assets are recognised initially, they aremeasured at fair value, plus, in the case of financial assets not at
fair value through profit or loss, directly attributable transaction costs.
Subsequentmeasurement
The subsequentmeasurement of financial assets depends on their classification as follows:
(i)
Financial assets at fair value throughprofit or loss
Financial assets at fair value through profit or loss include financial assets held for trading. Financial assets are
classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This
category includes derivative financial instruments entered into by the Group that are not designated as hedging
instruments inhedge relationships asdefinedby FRS39.Derivatives, including separatedembeddedderivatives are
also classified as held for trading unless they are designated as effective hedging instruments.
TheGroup has not designated any financial assets upon initial recognition at fair value through profit or loss.
Subsequent to initial recognition, financial assets at fair value throughprofit or loss aremeasuredat fair value. Any
gains or losses arising from changes in fair valueof thefinancial assets are recognised inprofit or loss. Net gains or
net losses onfinancial assets at fair value throughprofit or loss includeexchangedifferences, interest anddividend
income.
Derivatives embedded inhost contracts are accounted for as separatederivatives and recorded at fair value if their
economic characteristics and risks are not closely related to those of the host contracts and the host contracts are
notmeasured at fair valuewith changes in fair values recognised inprofit or loss. These embeddedderivatives are
measured at fair valuewith changes in fair value recognised inprofit or loss. Reassessment only occurs if there is a
change in the terms of the contract that significantlymodifies the cash flows that wouldotherwise be required.
(ii)
Loans and receivables
Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at
amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or
losswhen the loans and receivables are derecognisedor impaired, and through the amortisation process.
(iii)
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixedmaturity are classified as held-to-
maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent
to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest
method, less impairment. Gains and losses are recognised in profit or losswhen the held-to-maturity investments
are derecognised or impaired, and through the amortisation process.
