82 / 178
80
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)
(b) Financial liabilities
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. A financial liability is classified into the following two (2) categories
after initial recognition for the purpose of subsequent measurement:
(i) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss comprise financial liabilities that are
held for trading, derivatives (both, freestanding and embedded) and financial liabilities
that were specifically designated into this classification upon initial recognition.
Subsequent to initial recognition, financial liabilities 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 liabilities classified as at fair value through profit or loss are recognised in profit
or loss. Net gains or losses on financial liabilities 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.
(ii) Other financial liabilities
Financial liabilities classified as other financial liabilities comprise non-derivative financial
liabilities that are neither held for trading nor initially designated as at fair value through
profit or loss.
Subsequent to initial recognition, other financial liabilities are measured at amortised
cost using the effective interest method. Gains or losses on other financial liabilities are
recognised in profit or loss when the financial liabilities are derecognised and through the
amortisation process.
A financial liability is derecognised when, and only when, it is extinguished, i.e. when the
obligation specified in the contract is discharged or cancelled or expired. An exchange
between an existing borrower and lender of debt instruments with substantially different terms
are accounted for as an extinguishment of the original financial liability and the recognition of
a new financial liability. Similarly, a substantial modification of the terms of an existing financial
liability is accounted for as an extinguishment of the original financial liability and the recognition
of a new financial liability.
Any difference between the carrying amount of a 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.
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 in accordance with the original or modified terms of a debt instrument.