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Gamuda Berhad (29579-T) • Annual Report 2012
2.
Summary of significant accounting policies (cont’d.)
2.27 Financial liabilities (cont’d.)
b)
Other financial liabilities
The Group’s and the Company’s other financial liabilities include trade payables, other payables and
loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs
and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Borrowings are classified
as current liabilities unless the group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange or modification is treated as a derecognition
of the original liability and the recognition of a new liability, and the difference in the respective carrying
amounts is recognised in profit or loss.
2.28 Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments such as interest rate swaps to hedge its interest rate risk. Such
derivative financial instruments are initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently measured at fair value at each reporting date. Derivatives are carried as
financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for
hedge accounting and the ineffective portion of an effective hedge, are taken directly to profit or loss.
For the purpose of hedge accounting, hedges are classified as:
-
Fair value hedges, when hedging the exposure to changes in the fair value of a recognised asset or
liability or an unrecognised firm commitment (except for foreign currency risk); or
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Cash flow hedges, when hedging exposure to variability in cash flows that is either attributable to a
particular risk associated with a recognised asset or liability or a highly probable forecast transaction or
the foreign currency risk in an unrecognised firm commitment; or
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hedges of a net investment in a foreign operation.
NoTES To ThE FINANCIAL STATEMENTS
31 July 2012