Amal Ltd 2016-17

Notes to the Financial Statements Amal Ltd | Annual Report 2016-17 company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Initial recognition and measurement Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the statement of profit and loss. Subsequent measurement After initial recognition, financial assets are measured at: • fair value (either through other comprehensive income or through profit or loss) or, • amortised cost i) Debt instruments: Subsequently measurement of debt instruments depends on the business model of the company for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the company classifies its debt instuments: Measured at amortised cost: Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (‘EIR’) method less impairment, if any, The amortisation of EIR and loss arising from impairment, if any is recognised in the Statement of Profit and Loss. Measured at fair value through other comprehensive income: Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognised in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ‘other income’ in the Statement of Profit and Loss. Measured at fair value through profit or loss: A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as ‘other income’ in the Statement of Profit and Loss. ii) Equity instruments : The Company subsequently measures all investments in equity instruments other than subsidiaries, associates and joint venture at fair value where the Company’s Management has elected to present fair value gains and losses on such equity investments in other comprehensive income. There is no subsequent reclassification of these fair value gains and losses to the statement of profit or loss. Dividends from such investments continue to be recognised in profit or loss as other income when the Company’s right to receive payments is established. Note 1 Significant Accounting Policies (continued)