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Straco Corporation Limited • Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
3
Significant accounting policies (cont’d)
3.6 Financial instruments (cont’d)
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a
legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Non-derivative financial assets of the Group comprise loans and receivables.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised
initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised
cost using the effective interest method, less any impairment losses.
Loans and receivables of the Group comprise cash and cash equivalents and trade and other receivables (excludes prepayments).
Cash and cash equivalents comprise cash balances and deposits with financial institutions which are subject to an insignificant risk of changes in their
fair values, and are used by the Group in the management of its short-term commitments. For the purpose of the statement of cash flows, bank
overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included in cash and cash equivalents.
Non-derivative financial liabilities
The Group initially recognised debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities
(including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes
a party to the contractual provision of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a
legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Non-derivative financial liabilities of the Group comprise trade and other payables.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these
financial liabilities are measured at amortised cost using the effective interest method.
