FRENCKEN GROUP LIMITED
ANNUAL REPORT 2015
67
NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(u) Financial assets (Cont'd)
(i) Classification (Cont'd)
(b) Financial assets, available-for-sale
Financial assets, available-for-sale are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are presented as non-current assets unless management
intends to dispose of the assets within 12 months after the balance sheet date.
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on the trade-date – the date on which the
Group and the Company commit to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or have been transferred and the Group and the Company have transferred substantially all risks and rewards
of ownership.
On the disposal of a financial asset, the difference between the net sale proceeds and its carrying amount
is taken to the income statement. Any amount in the fair value reserve relating to that asset is also taken to
the income statement.
(iii) Initial measurement
Financial assets are initially recognised at fair value plus transaction costs.
(iv) Subsequent measurement
Financial assets, available-for-sale is subsequently carried at fair value. Loans and receivables is carried at
amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial instrument and
allocates the interest income or expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts or payments (including all fees on points paid or received
that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial instrument, or where appropriate, a shorter period. Income
and expense are recognised on an effective interest basis for debt instruments other than those financial
instruments at fair value through profit or loss.
Interest and dividend income on financial assets, available-for-sale are recognised separately in the income
statement. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated
in foreign currencies are analysed into currency translation differences on the amortised cost of the securities
and other changes; the currency translation differences are recognised in the income statement and the
other changes are recognised in the fair value reserve. Changes in fair value of available-for-sale equity
securities (i.e. monetary items) are recognised in the fair value reserve, together with the related currency
translation differences.
For available-for-sale equity investment that does not have a quoted market price in an active market and
whose fair value cannot be reliably measured and derivative that are linked to and must be settled by delivery
of such unquoted equity instruments, it is measured at cost less any identified impairment loss at the end of
each financial year subsequent to initial recognition.
