Annual Report 2016
97
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
Financial liabilities at FVTPL – continued
A financial liability other than a financial liability held for trading may be designated as at FVTPL
upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
• the financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance with
the Group’s documented risk management or investment strategy, and information about the
grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits
the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
excludes any interest paid on the financial liabilities and is included in the other gains and losses
line item. Fair value is determined in a manner described in Note 5.
Other financial liabilities
Other financial liabilities including trust receipt loans, trade and bills payables, others payables,
and bank borrowings are subsequently measured at amortised cost, using the effective interest
method.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments (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 financial liability, or, where appropriate, a
shorter period, to the net carrying amount on initial recognition.
Interest expense is recognised on an effective interest basis.
