QL Resources Berhad (428915-X)
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2. Significant accounting policies (Cont’d)
(c) Financial instruments (Cont’d)
(iv) Regular way purchase or sale of financial assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require
delivery of the asset within the time frame established generally by regulation or convention in the marketplace
concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade
date accounting. Trade date accounting refers to:
(a) the recognition of an asset to be received and the liability to pay for it on the trade date; and
(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a
receivable from the buyer for payment on the trade date.
(v) Hedge accounting
Fair value hedge
A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an
unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, that is
attributable to a particular risk and could affect the profit or loss.
In a fair value hedge, the gain or loss from remeasuring the hedging instrument at fair value or the foreign
currency component of its carrying amount translated at the exchange rate prevailing at the end of the reporting
period is recognised in profit or loss. The gain or loss on the hedged item, except for hedge item categorised
as available-for-sale, attributable to the hedged risk is adjusted to the carrying amount of the hedged item and
recognised in profit or loss. For a hedge item categorised as available-for-sale, the fair value gain or loss
attributable to the hedge risk is recognised in profit or loss.
Fair value hedge accounting is discontinued prospectively when the hedging instrument expires or is sold,
terminated or exercised, the hedge is no longer highly effective or the hedge designation is revoked.
Cash flow hedge
A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction and could affect the
profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined
to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised
in profit or loss.
Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from
equity into profit or loss in the same period or periods during which the hedged forecast cash flows affect profit
or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other
comprehensive income is removed from equity and included in the initial amount of the asset or liability.
However, loss recognised in other comprehensive income that will not be recovered in one or more future
periods is reclassified from equity into profit or loss.
Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold,
terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected
to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or
loss on the hedging instrument remains in equity until the forecast transaction occurs. When the forecast
transaction is no longer expected to occur, any related cumulative gain or loss recognised in other
comprehensive income on the hedging instrument is reclassified from equity into profit or loss.
Notes to the Financial Statements
(Cont’d.)
