4 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
4.2 Financial instruments (Cont’d)
The Company 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 Company 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 Company 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.
The Company has the following non-derivative financial assets: 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 comprise cash and cash equivalents, and trade receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank.
Non-derivative financial liabilities
All financial liabilities are recognised initially on the trade date, which is the date that the Company becomes a party
to the contractual provisions of the instrument.
The Company derecognises a financial liability when its contractual obligations are discharged, 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 Company 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.
The Company classifies non-derivative financial liabilities into the other financial liabilities category. 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.
Other financial liabilities comprise other payables.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
4.3 Impairment
Non-derivative financial assets
A financial asset is assessed at the end of each reporting period to determine whether there is objective evidence
that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the
initial recognition of the asset, and that the loss event has an impact on the estimated future cash flows of that asset
that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor, indications that
a debtor or issuer will enter bankruptcy or economic conditions that correlate with defaults.
NOTES TO THE FINANCIAL STATEMENTS
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M&C BUSINESS TRUST MANAGEMENT LIMITED
