3.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
3.7
Financial Instruments (cont'd)
3.7.2
Financial instrument categories and subsequent measurement (cont'd)
Financial liabilities
All financial liabilities are subsequently measured at amortised cost.
Financial liabilities are classified as current liabilities, except for those having maturity dates
later than 12 months after the end of the reporting period which are classified as non-current.
3.7.3
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments
to reimburse the holder for a loss it incurs because a specified debtor fails to make payment
when due.
Financial guarantee contracts are classified as deferred income and are amortised to profit
or loss using a straight-line method over the contractual period or, when there is no specified
contractual period, recognised in profit or loss upon discharge of the guarantee. When
settlement of a financial guarantee contract becomes probable, an estimate of the obligation
is made. If the carrying value of the financial guarantee contract is lower than the obligation,
the carrying value is adjusted to the obligation amount and accounted for as a provision.
3.7.4
Derivative financial instruments
The Group enters into derivative financial instruments such as foreign currency forward
contracts to manage its exposure to foreign currency risks.
Derivatives are initially recognised at fair value at the date the derivative contract is entered
and are subsequently remeasured to their fair value at the end of the reporting period. The
resulting gain or loss is recognised in profit or loss immediately.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative
with a negative fair value is recognised as a financial liability. A derivative is presented as
a non-current asset or a non-current liability if the remaining maturity of the instrument is
more than 12 months and it is not expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current liabilities.
The Group has not designated any derivatives as hedging instruments.
3.7.5
Derecognition
A financial asset or part of it is derecognised, when and only when the contractual rights
to the cash flows from the financial asset expire or the financial asset is transferred to
another party without retaining control or substantially all risks and rewards of the asset. On
derecognition of a financial asset, the difference between the carrying amount and the sum of
the consideration received (including any new asset obtained less any new liability assumed)
and any cumulative gain or loss that had been recognised in equity is recognised in the profit
or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified
in the contract is discharged or cancelled or expired. On derecognition of a financial liability,
the difference between the carrying amount of the financial liability extinguished or transferred
to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2014 (CONT’D)
Pentamaster Corporation Berhad
(572307-U)
•
Annual Report 2014
54
