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Notes to the Consolidated Financial Statements
30 June 2013
40 BRADKEN LIMITED ANNUAL REPORT 2013
Notes to the consolidated financial statements
30 June 2013
(continued)
1 Summary of significant accounting policies (continued)
(ii) Loans and receivables
(iii) Held-to-maturity investments
(iv) Available-for-sale financial assets
Recognition and derecognition
Measurement
Fair value
Impairment
Regular way purchases and sales of financial assets are recognised on trade-date – the date on which the group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the
receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet
date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet (note
8).
Loans and receivables and held-to-maturity investments are subsequently carried at amortised cost using the effective interest
method.
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either
designated in this category or not classified in any of the other categories. They are included in non-current assets unless
management intends to dispose of the investment within 12 months of the balance sheet date.
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in profit or loss.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other
comprehensive income are reclassified to profit or loss as gains and losses from investment securities.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for
unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's
length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option
pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that
the Group’s management has the positive intention and ability to hold to maturity.
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only
if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the
asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a
significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are
impaired.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value.
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are
presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from
financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations
when the group's right to receive payments is established. Interest income from these financial assets is included in the net
gains/(losses).
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Bradken Limited