Home' Huon Aquaculture : 2015 Annual Report Contents Notes to the financial statements
Annual Repor t 2015
18. Fair value measurements continued
There has been no transfers between the fair value measurement levels during the financial year.
All other financial asset and liabilities that are measured at cost have a carr ying amount that approximates the fair value at balance sheet date.
Recognition and measurement
The consolidated group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risk,
including for ward foreign exchange contracts. The derivative financial instruments do not qualify for hedge accounting. Changes in the
fair value of the derivative financial instruments are recognised immediately in consolidated income statement.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their
fair value at each repor ting date.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a par ty to the contractual provisions of the instrument.
For financial assets, this is equivalent to the date that the company commits itself to either purchase or sell the asset (i.e. trade date
accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through
consolidated income statement ’ in which case transaction costs are recognised as expenses in consolidated income statement immediately.
Classification and Subsequent Measurement
Financial instruments are classified at fair value or amor tised cost depending on their classification in accordance with AASB139. Where
available, quoted prices in an active market are used to determine fair value.
Amor tised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal
repayments and any reduction for impairment, and adjusted for any cumulative amor tisation of the difference between that initial amount
and the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate
that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts)
through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carr ying
amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carr ying
amount with a consequential recognition of an income or expense item in consolidated income statement.
(i) Financial assets at fair value through consolidated income statement
Financial assets are classified at “fair value through consolidated income statement ” when they are held for trading for the purpose of
shor t-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch
or to enable per formance evaluation where a group of financial assets is managed by key management personnel on a fair value basis
in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with
changes in carr ying amount being included in consolidated income statement.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and
are subsequently measured at amor tised cost. Gains or losses are recognised in consolidated income statement through the amor tisation
process and when the financial asset is derecognised.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it
is the consolidated group’s intention to hold these investments to maturity. They are subsequently measured at amor tised cost. Gains or
losses are recognised in consolidated income statement through the amor tisation process and when the financial asset is derecognised.
(iv) Financial Liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amor tised cost. Gains or losses
are recognised in consolidated income statement through the amor tisation process and when the financial liability is derecognised.
At the end of each repor ting period, the consolidated group assesses whether there is objective evidence that a financial asset has
been impaired. A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event ”) having occurred, which has an impact on the estimated future cash flows
of the financial asset(s).
Links Archive Navigation Previous Page Next Page