EXCEL FORCE MSC BERHAD Annual Report 2018

73 ANNUAL REPORT 2018 3. Significant Accounting Policies (cont’d) (g) Financial liabilities (cont’d) Policy applicable from 1 January 2018 (cont’d) Financial instrument categories and subsequent measurement (cont’d) (b) Financial liabilities at amortised cost Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss. The Group’s and the Company’s financial liabilities designated as amortised cost comprise trade and other payables and loans and borrowings. Derecognition A financial liability or part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the 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. Policy applicable before 1 January 2018 Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definition of financial liabilities. Financial liabilities are recognised on the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. The Group and the Company classify their financial liability at initial recognition, into the following categories: (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading, contingent consideration in a business combination or financial liabilities designated into this category upon initial recognition. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivatives financial instruments that are not designated as effective hedging instruments. Separated embedded derivatives are also categorised as held for trading unless they are designated as effective hedging instruments. Gains or losses on financial liabilities held for trading are recognised in profit or loss. (ii) Other financial liabilities measured at amortised cost The Group’s and the Company’s other financial liabilities comprise trade and other payables and loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Notes To The Financial Statements 31 December 2018 (cont’d)