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Notes to the financial statements
31 December 2014
Bursa Malaysia
•
Annual Report 2014
108
2. Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(h) Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definition of a financial liability.
Financial liabilities are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the
contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.
(i) Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This includes derivatives
entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value
and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include
exchange differences.
The Group and the Company do not have any financial liabilities at FVTPL at the current and previous financial year ends.
(ii) Other financial liabilities
Other financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised
cost using the effective interest method.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation
process.
A financial liability is derecognised when the obligation under the liability is extinguished.
When an existing financial liability is replaced by another instrument from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(i) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group and the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy based
on the lowest level input that is significant to the fair value measurement as a whole.