Kimlun Corporation Berhad Annual Report 2020

200901023978 (867077-X) Kimlun Corporation Berhad (Incorporated in Malaysia) 2. Summary of significant accounting policies (cont'd) 2.13 Financial instruments (cont'd) (a) Financial assets (cont'd) Initial recognition and measurement (cont'd) Subsequent measurement - Financial assets at amortised cost (debt instruments) - - - Financial assets at fair value through profit or loss - and - The Group's and the Company’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. Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) For purposes of subsequent measurement financial assets are classified in four categories: Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group and the Company commit to purchase or sell the asset. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) The Group and the Company measure financial assets at amortised cost if both of the following conditions are met: 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. The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; The Group's and the Company's only financial assets are its financial assets at amortised cost (debt instruments). - 37 - Annual Report 2020 094 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020