100
ANNUAL REPORT 2016
NOTES TOTHE FINANCIAL STATEMENTS
30 JUNE 2016
(Continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.11 Financial instruments (continued)
Financial instruments are recognised on the statement of financial position when the Group has become a party to the contractual
provisions of the instrument. At initial recognition, a financial instrument is recognised at fair value plus, in the case of a financial
instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the
financial instrument.
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.
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.
(iv) Available-for-sale financial assets
Financial assets classified as available-for-sale comprise non-derivative financial assets that are designated as available for sale
or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.
Subsequent to initial recognition, financial assets classified as available-for-sale are measured at fair value. Any gains or
losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised directly in
other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial
asset is derecognised, at which time the cumulative gains or losses previously recognised in other comprehensive income
are recognised in profit or loss. However, interest calculated using the effective interest method is recognised in profit or
loss whilst dividends on available-for-sale equity instruments are recognised in profit or loss when the right of the Group
to receive payment is established.
