Page 89 - HRC_AR2020
P. 89

HENGYUAN REFINING COMPANY BERHAD    I    87













             2   sUMMarY of siGnificant accoUntinG policies (continued)
                  2.7  financial assets
                       Financial assets are recognised in the statement of financial position when, and only when, the Company becomes a
                       party to the contractual provisions of the financial instrument.
                       (a)  classification
                           The Company classifies its financial assets in the following measurement categories:
                           •  those  to  be  measured  subsequently  at  fair  value  (either  through  other  comprehensive  income  (“OCI”)  or
                             through profit or loss), and
                           •  those to be measured at amortised cost.

                           The classification depends on the entity’s business model for managing the financial assets and the contractual
                           terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss
                           or OCI. The Company reclassifies its debt instruments when and only when its business model for managing those
                           assets changes.
                       (b)  recognition and measurement

                           Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the
                           Company commits to purchase or sell the asset.
                           At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset
                           not at fair value through profit or loss (‘FVTPL’), transaction costs that are directly attributable to the acquisition
                           of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.
                           Financial assets with embedded derivatives are considered in their entirety when determining whether their
                           cash flows are solely payment of principal and interest (‘SPPI’).
                           Debt instruments
                           Subsequent measurement of debt instruments depends on the Company’s business model for managing the
                           asset and the cash flow characteristics of the asset. The Company reclassifies debt instruments when and only
                           when its business model for managing those assets changes.

                           There are three measurement categories into which the Company classifies its debt instruments.
                           (i)  amortised cost
                              Assets  that  are  held  for  collection  of  contractual  cash  flows  where  those  cash  flows  represent  SPPI  are
                              measured at amortised cost and subject to impairment. Interest income from these financial assets is included
                              in other income using the effective interest rate method. Gains and losses are recognised in profit or loss
                              within administrative expenses when the asset is derecognised, modified or impaired.

                           (ii)  fair value through other comprehensive income (‘fVoci’)
                              Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
                              assets’ cash flows represent SPPI, are measured at FVOCI. Movements in the carrying amount are taken
                              through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange
                              gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative
                              gain or loss previously recognised in OCI is reclassified from equity to profit or loss. Interest income from these
                              financial assets is included in other income using the effective interest rate method.
   84   85   86   87   88   89   90   91   92   93   94