| ANNUAL REPORT 2015
112
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
4.11 Financial instruments (cont’d)
An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the
economic characteristics and risks of the embedded derivative is not closely related to the economic characteristics and
risks of the host contract, a separate instrument with the same terms as the embedded derivative meets the definition
of a derivative, and the hybrid instrument is not measured at fair value through profit or loss.
(a) Financial assets
A financial asset is classified into the following four (4) categories after initial recognition for the purpose of
subsequent measurement:
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise financial assets that are held for trading (i.e.
financial assets acquired principally for the purpose of resale in the near term), derivatives (both, freestanding
and embedded) and financial assets that were specifically designated into this classification upon initial
recognition.
Subsequent to initial recognition, financial assets classified as at fair value through profit or loss are measured
at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as at fair value
through profit or loss are recognised in profit or loss. Net gains or losses on financial assets classified as at fair
value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such
income is recognised separately in profit or loss as components of other income or other operating losses.
However, derivatives that is linked to and must be settled by delivery of unquoted equity instruments that do
not have a quoted market price in an active market are recognised at cost.
(ii) Held-to-maturity investments
Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed or
determinable payments and fixed maturity that the Group has the positive intention and ability to hold to
maturity.
Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at amortised
cost using the effective interest method. Gains or losses on financial assets classified as held-to-maturity
are recognised in profit or loss when the financial assets are derecognised or impaired, and through the
amortisation process.
(iii) Loans and receivables
Financial assets classified as loans and receivables comprise non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
Subsequent to initial recognition, financial assets classified as loans and receivables are measured at amortised
cost using the effective interest method. Gains or losses on financial assets classified as loans and receivables
are recognised in profit or loss when the financial assets are derecognised or impaired, and through the
amortisation process.
