TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
52
Notes to the financial statements
For the financial year ended 31 March 2016
2.
Summary of significant accounting policies (cont’d)
2.11
Financial instruments
(a)
Financial assets
Initial recognition and measurement
Financial assets 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 assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets
not at fair value through profit or loss, directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
(i)
Loans and receivables
Non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables
are measured at amortised cost using the effective interest method, less impairment. Gains and losses are
recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the
amortisation process.
(ii)
Available-for-sale financial assets
Available-for-sale financial assets include equity and debt securities. Equity investments classified as
available-for-sale are those, which are neither classified as held for trading nor designated at fair value
through profit or loss. Debt securities in this category are those which are intended to be held for an
indefinite period of time and which may be sold in response to needs for liquidity or in response to
changes in the market conditions.
After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any
gains or losses from changes in fair value of the financial asset are recognised in other comprehensive
income, except that impairment losses, foreign exchange gains and losses on monetary instruments and
interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain
or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as
a reclassification adjustment when the financial asset is de-recognised.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less
impairment loss.
De-recognition
A financial asset is de-recognised where the contractual right to receive cash flows from the asset has expired.
On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of
the consideration received and any cumulative gain or loss that had been recognised in other comprehensive
income is recognised in profit or loss.
