Annual Report 2016
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2. Significant accounting policies (Cont’d)
(c) Financial instruments (Cont’d)
(ii) Financial instrument categories and subsequent measurement (Cont’d)
Financial assets (Cont’d)
(c) Available-for-sale financial assets
Available-for-sale category comprises investment in equity and debt securities instruments that are not
held for trading.
Investments in equity instruments that do not have a quoted market price in an active market and whose
fair value cannot be reliably measured are measured at cost. Other financial assets categorised as
available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other
comprehensive income, except for impairment losses, foreign exchange gains and losses arising from
monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges
which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other
comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument
using the effective interest method is recognised in profit or loss.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for
impairment (see Note 2(k)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value
through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a
derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent
consideration in a business combination or financial liabilities that are specifically designated into this category
upon initial recognition.
Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted
price in an active market for identical instruments whose fair values otherwise cannot be reliably measured
are measured at cost.
Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their
fair values with the gain or loss recognised in profit or loss.
(iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with
the original or modified terms of a debt instrument.
Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to
profit or loss using a straight-line method over the contractual period or, when there is no specified contractual
period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee
contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial
guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and
accounted for as a provision.
Notes to the Financial Statements
(Cont’d.)
