Al-`Aqar Healthcare REIT Annual Report 2019

06 FINANCIAL STATEMENT 126 Gains or losses arising from changes in fair value of the derivatives that does not qualify for hedge accounting are recognised in profit or loss within other income/ (losses), net. Net gains or losses on derivatives include exchange differences. Islamic financing are classified as current liabilities unless the Group and the Fund have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Fees paid on the establishment of Islamic financing facilities are recognised as transaction costs of the Islamic financing to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw- down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Afinancial liability isderecognisedwhen theobligationunder the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially difference terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. When Islamic financing measured at amortised cost is modified without this resulting in derecognition, any gains or losses, being the difference between the original contractual cash flows and the modified cash flows discounted at the original effective profit rate, shall be recognised immediately in profit or loss in finance cost. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. 3.6 Cash and cash equivalents The Group and the Fund adopt the indirect method in the preparation of the statements of cash flows. Cash and cash equivalents comprise cash and bank balances and other short-term, highly liquid investments with from the date of acquisition and are readily convertible to cash and with insignificant risk of changes in value and excludes amounts which are restricted for general use. Notes To The Financial Statements For The Financial Year Ended 31 December 2019 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.5 Financial instruments (Continued) Financial liabilities (Continued)