124 | CapitaLand Limited Annual Report 2014
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)
2.8 Financial instruments
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Non-derivative mnancial assets comprise investments in equity and debt securities, trade and other receivables
and cash and cash equivalents.
A mnancial asset is recognised if the Group becomes a party to the contractual provisions of the mnancial
asset. Financial assets are derecognised if the Group’s contractual rights to the cash nows from the mnancial
assets expire or if the Group transfers the mnancial assets to another party without retaining control or transfers
substantially all the risks and rewards of the assets. Regular way purchases and sales of mnancial assets
are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset.
Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only
when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
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A mnancial asset is classimed as fair value through promt or loss if it is held for trading or is designated as
such upon initial recognition. Financial assets are designated as fair value through promt or loss if the Group
manages such investments and makes purchase and sale decisions based on their fair value. Upon initial
recognition, attributable transaction costs are recognised in the promt or loss when incurred. Financial assets
at fair value through promt or loss are measured at fair value, and changes therein, which takes into account
any dividend income, are recognised in the promt or loss.
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The Group’s investments in equity securities and certain debt securities are classimed as available-for-sale
mnancial assets and are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than for
impairment losses (note 2.8(e)) and foreign exchange gains and losses on available-for-sale monetary items
(note 2.3), are recognised directly in other comprehensive income and presented in the available-for-sale
reserve in equity. When an investment is derecognised, the cumulative gain or loss in equity is reclassimed
to the promt or loss.
Investments in equity securities whose fair value cannot be reliably measured are measured at cost less
accumulated impairment loss.
Loans and receivables
Loans and receivables are mnancial assets with mxed 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 cash and cash equivalents,
and trade and other receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of the statement of
cash nows, pledged deposits are excluded whilst bank overdrafts that are repayable on demand and form an
integral part of the Group’s cash management are included as a component of cash and cash equivalents.
