49
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments
(i)
Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are
originated. All other financial assets (including assets 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 provisions of the instrument.
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, or it neither
transfers nor retains substantially all of the risks and rewards of ownership and
does not retain control over the transferred asset. 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.
The Group classifies non-derivative financial assets into the following categories:
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 and other
receivables (excluding prepayments).
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments (cont’d)
(i)
Non-derivative financial assets (cont’d)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with
maturities of three months or less from the acquisition date that are subject
to an insignificant risk of changes in their fair value, and are used by the Group
in the management of its short-term commitments. For the purpose of the
statement of cash flows, pledged deposits are excluded whilst bank overdrafts
that are repayable on demand and that form an integral part of the Group’s cash
management are included in cash and cash equivalents.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on
the date that they are originated. Financial liabilities for contingent consideration
payable in a business combination are recognised at the acquisition date. 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 provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are
discharged, cancelled or expire.
Financial liabilities for contingent consideration payable in a business combination
are initially measured at fair value. Subsequent changes in the fair value of the
contingent consideration are recognised in profit or loss.
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.
