2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12 Financial instruments (continued)
(b)
Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a party to the
contractual provisions of the financial instrument. The Group determines the classification of
its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value plus in the case of financial liabilities
not at fair value through profit or loss, directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
(i)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held
for trading. Financial liabilities are classified as held for trading if they are acquired
for the purpose of selling in the near term. This category includes derivative financial
instruments entered into by the Group that are not designated as hedging instruments
in hedge relationships. Separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments.
Subsequent to initial recognition, financial liabilities at fair value through profit or
loss are measured at fair value. Any gains or losses arising from changes in fair value
of the financial liabilities are recognised in profit or loss.
The Group has not designated any financial liabilities upon initial recognition at fair
value through profit or loss.
(ii)
Financial liabilities at amortised cost
After initial recognition, financial liabilities that are not carried at fair value through
profit or loss are subsequently measured at amortised cost using the effective interest
method. Gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
65
HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
