Annual Report 2016
91
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
– continued
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of inventories are
determined on a first-in-first-out basis. Net realisable value represents the estimated selling price
less all estimated costs of completion and costs necessary to make the sale.
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets or financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at
fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
The Group’s financial assets are classified into one of the four categories, including financial assets
at fair value through profit or loss (“FVTPL”), loans and receivables, held-to-maturity investments
and available-for-sale financial assets. The classification depends on the nature and purpose of
the financial assets and is determined at the time of initial recognition. All regular way purchases
or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument
and of allocating interest income over the relevant year. The effective interest rate is the rate that
exactly discounts estimated future cash receipts (including all fees and 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 debt instrument, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
Interest income is recognised on an effective interest basis for debt instruments.
