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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.10 Financial instruments (continued)
A financial liability is any liability that is a contractual obligation to deliver cash or another financial
asset to another enterprise, or a contractual obligation to exchange financial assets or financial
liabilities with another enterprise under conditions that are potentially unfavourable to the Group.
Financial instruments are recognised on the statement of financial position when the Group has
become a party to the contractual provisions of the instrument. At initial recognition, a financial
instrument is recognised at fair value plus, in the case of a financial instrument not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of
the financial instrument.
An embedded derivative is separated from the host contract and accounted for as a derivative if,
and only if the economic characteristics and risks of the embedded derivative is not closely related
to the economic characteristics and risks of the host contract, a separate instrument with the same
terms as the embedded derivative meets the definition of a derivative, and the hybrid instrument is
not measured at fair value through profit or loss.
(a) Financial assets
A financial asset is classified into the following four (4) categories after initial recognition for the
purpose of subsequent measurement:
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise financial assets that are held for
trading (i.e. financial assets acquired principally for the purpose of resale in the near term),
derivatives (both, freestanding and embedded) and financial assets that were specifically
designated into this classification upon initial recognition.
Subsequent to initial recognition, financial assets classified as at fair value through profit or
loss are measured at fair value. Any gains or losses arising from changes in the fair value
of financial assets classified as at fair value through profit or loss are recognised in profit or
loss. Net gains or losses on financial assets classified as at fair value through profit or loss
exclude foreign exchange gains and losses, interest and dividend income. Such income is
recognised separately in profit or loss as components of other income or other operating
losses.
However, derivatives that are linked to and must be settled by delivery of unquoted equity
instruments that do not have a quoted market price in an active market are recognised at
cost.
(ii) Held-to-maturity investments
Financial assets classified as held-to-maturity comprise non-derivative financial assets with
fixed or determinable payments and fixed maturity that the Group has the positive intention
and ability to hold to maturity.
Subsequent to initial recognition, financial assets classified as held-to-maturity aremeasured
at amortised cost using the effective interest method. Gains or losses on financial assets
classified as held-to-maturity are recognised in profit or loss when the financial assets are
derecognised or impaired, and through the amortisation process.