Page 26 - Directors' report and accounts 2019-20

23
Notes to and forming part of the Consolidated Financial Statements for the year ended 30 June 2020
C3 Financial Instruments
Recognition and initial measurement
Trade receivables and debt securities issued are are initially recognised when they are are originated All other financial assets and financial liabilities are initially recognised when the the Group becomes a a a a a a a a a a a party to the the contractual provisions of the instrument A financial financial asset (unless it it it is is a a a a a a a a a a a a trade receivable without a a a a a a a a a a a a significant financing component) or financial financial liability is is initially measured at at at at fair value plus for an an item not at at at at FVTPL transaction costs that are directly attributable to its acquisition or issue A trade receivable without a a a a a a a a a significant financing component is is is initially measured at the transaction price Classification and subsequent measurement
On initial recognition a a a a a a a a a a financial asset is is classified as as as as measured at: amortised cost FVOCI - debt investment FVOCI - equity investment or FVTPL Financial assets are not reclassified subsequent to their initial recognition unless the the Group changes its business model for managing financial financial assets assets in in in in which case all affected financial financial assets assets are reclassified on the first day of the the the first reporting period following the the the change in in in in the the the business model A financial asset is is is measured at at amortised cost if it it meets both of the following conditions and is is is not designated as at FVTPL:
• it it is is held within a a a a a a business model whose objective is is to to hold assets to to collect contractual cash flows and • its contractual terms give rise on on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
All financial assets not classified as as as as as as measured measured at at amortised cost or or FVOCI as as as as as as described above are measured measured at at FVTPL Financial assets at FVTPL These assets are subsequently measured at fair value Net gains and losses including any interest or dividend income are recognised in in profit or loss Financial assets at amortised cost These assets are subsequently measured at amortised amortised cost using the effective interest method The The amortised amortised cost is reduced by impairment impairment losses losses Interest income foreign exchange gains and and losses losses and and impairment impairment are recognised recognised in in in profit profit or or or loss loss loss Any gain or or or loss loss loss on on derecognition is is is recognised recognised in in in profit profit or or or loss loss loss Financial liabilities - Classification subsequent measurement
and and gains and and losses Financial liabilities are classified classified as as as as as measured at amortised cost or or FVTPL A financial liability is is classified classified as as as as as at at at FVTPL if if it it it it it is is is classified as as as held-for-trading it it it it it is is is a a a a a a a a a derivative or or it it it it it is is is designated as as as such on on initial recognition Financial liabilities at at FVTPL are measured at at fair value and and net gains and and losses including any interest expense are are recognised in in in profit or or loss Other financial liabilities are are subsequently measured at amortised cost using the the effective interest method Interest expense and and foreign exchange gains and and losses are recognised in in in profit or or loss loss loss Any gain or or loss loss loss on on derecognition is is also recognised in in profit or or loss loss loss