EXCEL FORCE MSC BERHAD Annual Report 2018

69 ANNUAL REPORT 2018 3. Significant Accounting Policies (cont’d) (f) Financial assets Policy applicable from 1 January 2018 Recognition and initial measurement Financial assets are recognised in the statements of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the financial instrument. At initial recognition, the Group or the Company measures a financial asset at its fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance of the financial instruments. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Financial instrument categories and subsequent measurement The Group and the Company determine the classification of financial assets at initial recognition and are not reclassified subsequent to their initial recognition unless the Group or the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. For purposes of subsequent measurement, financial assets are classified into the following categories: (a) Financial assets at amortised cost The Group and the Company measure financial assets at amortised cost if both of the following conditions are met: • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortised cost are subsequently measured using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss. The Group’s and the Company’s financial assets at amortised cost include trade and other receivables, amount due to subsidiary companies, an associate and related companies, fixed deposits with licensed banks and cash and bank balances. Notes To The Financial Statements 31 December 2018 (cont’d)