2.
Significant accounting policies and other explanatory information (cont'd)
2A.
Significant accountingpolicies (cont'd)
Financial assets (cont'd)
Irrespective of the legal form of the transactions performed, financial assets are derecognisedwhen they pass
the “substanceover form” basedon thederecognition test prescribedbyFRS39 relating to the transfer of risks
and rewards of ownership and the transfer of control. Financial assets and financial liabilities are offset and the
net amount is reported in the statement of financial position if there is currently a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle
the liabilities simultaneously.
Subsequent measurement:
Subsequent measurement based on the classification of the financial assets in one of the following categories
under FRS 39 is as follows:
1. Financial assets at fair value through profit or loss: As at end of the reporting year, therewere no financial
assets classified in this category.
2. Loansand receivables: Loansand receivablesarenon-derivativefinancial assetswithfixedordeterminable
payments that are not quoted in an active market. Assets that are for sale immediately or in the near
term are not classified in this category. These assets are carried at amortised costs using the effective
interest method (except that short-duration receivableswith no stated interest rate are normallymeasured
at original invoice amount unless the effect of imputing interest would be significant) minus any reduction
(directly or through theuseof anallowanceaccount) for impairment or uncollectibility. Impairment charges
are provided only when there is objective evidence that an impairment loss has been incurred as a result
of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated. The methodology ensures that an impairment loss is not
recognised on the initial recognition of an asset. Losses expected as a result of future events, nomatter
how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of
anallowanceaccount. Theamount of the loss is recognised inprofit or loss.An impairment loss is reversed
if the reversal can be related objectively to an event occurring after the impairment loss was recognised.
Typically the trade and other receivables are classified in this category.
3. Held-to-maturity financial assets: As at end of the reporting year, therewere no financial assets classified
in this category.
4. Available-for-sale financial assets:As at endof the reporting year, therewereno financial assets classified
in this category.
Cash and cash equivalents
Cash and cash equivalents include cash and bank balances, and demand deposits. For the statement of cash
flows the item includes cash and cash equivalents less cash subject to restriction and bank overdrafts payable
on demand that form an integral part of cashmanagement.
Financial liabilities
Initial recognition, measurement and derecognition:
Afinancial liability is recognisedon the statement of financial positionwhen, andonlywhen, theentity becomes
a party to the contractual provisions of the instrument and it is derecognised when the obligation specified in
the contract is discharged or cancelled or expires. The initial recognition of financial liability is at fair value
normally represented by the transaction price. The transaction price for financial liability not classified at fair
value throughprofit or loss includes the transaction costs that aredirectly attributable to theacquisitionor issue
of the financial liability. Transaction costs incurred on the acquisition or issue of financial liability classified at
fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date.
Financial liabilities including bank and other borrowings are classified as current liabilities unless there is an
unconditional right to defer settlement of the liability for at least 12months after the end of the reporting year.
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