Frontken Berhad Annual Report 2017

65 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2017 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Financial Instruments (Cont’d) (i) Financial Assets (Cont’d) � Held-to-maturity investments As at the end of the reporting period, there were no financial assets classified under this category. � Loans and receivables financial assets Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Loans and receivables financial assets are classified as current assets, except for those having settlement dates later than 12 months after the reporting date which are classified as non-current assets. � Available-for-sale financial assets As at the end of the reporting period, there were no financial assets classified under this category. (ii) Financial Liabilities � Financial liabilities at fair value through profit or loss Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. � Other financial liaibilities Other financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (iii) Equity Instruments Equity instruments classified as equity are measured initially at cost and are not remeasured subsequently. Notes To The Financial Statements (cont’d)