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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.