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Notes to the
financial statements
For the financial year ended 31 December 2018
85
A N N U A L R E P O R T
2 0 1 8
2.
Summary of significant accounting policies (cont’d)
2.13
Financial instruments
(a)
Financial assets
Initial recognition and measurement
Financial assets are recognised when, and only when the entity becomes party to the
contractual provisions of the instruments.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in profit or loss.
Trade receivables are measured at the amount of consideration to which the Group expects
to be entitled in exchange for transferring promised goods or services to a customer,
excluding amounts collected on behalf of third party, if the trade receivables do not contain
a significant financing component at initial recognition.
Subsequent measurement
Investments in debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for
managing the asset and the contractual cash flow characteristics of the asset. The three
measurement categories for classification of debt instruments are:
(i)
Amortised cost
Financial assets that are held for the collection of contractual cash flows where
those cash flows represent solely payments of principal and interest are measured at
amortised cost. Financial assets are measured at amortised cost using the effective
interest method, less impairment. Gains and losses are recognised in profit or loss
when the assets are derecognised or impaired, and through amortisation process.
(ii)
Fair value through other comprehensive income (FVOCI)
Financial assets that are held for collection of contractual cash flows and for selling
the financial assets, where the assets’ cash flows represent solely payments of
principal and interest, are measured at FVOCI. Financial assets measured at FVOCI
are subsequently measured at fair value. Any gains or losses from changes in fair
value of the financial assets are recognised in other comprehensive income, except
for impairment losses, foreign exchange gains and losses and interest calculated using
the effective interest method are recognised in profit or loss. The cumulative gain or
loss previously recognised in other comprehensive income is reclassified from equity to
profit or loss as a reclassification adjustment when the financial asset is de-recognised.