WILLAS-ARRAY ELECTRONICS (HOLDINGS) LIMITED
98
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
– continued
Financial instruments
– continued
Financial liabilities and equity instruments
– continued
Derivative financial instruments
Derivatives are initially recognised at fair value at the date when a derivative contracts are entered
into and are subsequently remeasured to their fair value at the end of the reporting period. The
resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship.
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.
Financial guarantee contracts issued by the Group are initially measured at their fair value and
if not designated as at FVTPL, are subsequently measured at the higher of: (i) the amount of
obligation under the contract, as determined in accordance with IAS 37; and (ii) the amount initially
recognised less, when appropriate, cumulative amortisation recognised in accordance with the
revenue recognition policies.
Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and rewards
of ownership of the asset to another entity. If the Group neither transfers nor retains substantially
all the risks and rewards of ownership and continues to control the transferred asset, the Group
recognise its retained interest in the asset and an associated liability for amounts it may have
to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognised in other comprehensive income and accumulated equity is recognised in
profit or loss.
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is recognised in profit or loss.
