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Notes to the
Financial Statements
As at 31 March 2019
2.
Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(r) Financial assets (cont’d.)
Initial recognition and measurement (cont’d.)
In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash
flows that are ‘solely payments of principal and interest (“SPPI”) on the principal amount outstanding.
The assessment is referred to as the SPPI test and is performed at an instrument level.
The Group and the Company’s business model for managing financial assets refers to how it manages
its financial assets in order to generate cash flows. The business model determines whether cash
flows will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established
by regulation or convention in the market place (regular way trades) are recognised on the trade
date, i.e., the date that the Group or the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets of the Group and of the Company are
classified as either:
-
Financial assets at amortised cost (debt instruments) (“AC”);
-
Financial assets at fair value through profit or loss (“FVTPL”);
-
Financial assets at FVTOCI with recycling of cumulative gains and losses (debt instruments); or
-
Financial assets designated at FVTOCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments).
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group and the Company. The Group and the Company
measures financial assets at amortised cost if both of the following conditions are met:
-
The financial asset is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows; and
-
The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (“EIR”)
method and are subject to impairment. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired.
The Group and the Company’s financial assets at amortised cost include trade and other receivables
and cash and bank balances.
financial
statements
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