Notes to The
Financial Statements
Year ended 31 December 2015
3 Significant accounting policies (Cont’d)
3.4 Financial instruments (cont’d)
Non-derivative financial assets (cont’d)
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, loans and receivables are measured at amortised cost using the effective interest method,
less any impairment losses.
Loans and receivables comprise trade and other receivables, cash and cash equivalents and security deposits
receivable.
Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of the statement of cash
flows, cash collateral received is excluded.
Non-derivative financial liabilities
Financial liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual
provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or when
they expire.
The Group has the following non-derivative financial liabilities: loans and borrowings, trade and other payables,
and security deposits payable.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective
interest method.
Unitholders’ funds
Unitholders’ funds are classified as equity. Incremental costs directly attributable to the issue of units are recognised
as a deduction from equity, net of any tax effects.
Derivative financial instruments, including hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship
between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in
undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge
relationship as well as on an ongoing basis, whether the hedging instruments are expected to be ‘highly effective’
in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged
risk, and whether the actual results of each hedge are within a range of 80% - 125%. For a cash flow hedge of
a forecast transaction, the transaction should be highly probable to occur and should present an exposure to
variations in cash flows that could ultimately affect reported profit or loss.
103
ParkwayLife REIT
Annual Report 2015
