Page 168 - Adopt-a-School Foundation 2016-2017 Annual Report

ADOPT-A-SCHOOL FOUNDATION NPC
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
for the year ended 30 June 2017

1.8 financial instruments
classification

The Foundation classifies financial assets and financial liabilities into the following categories:

• Financial liabilities measured at amortised cost,
• Loans and receivables,

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition.

Financial instruments carried on the statement of financial position include cash and cash equivalents, trade and other receivables, trade and other payables,
loans to company companies, amounts owing by and to company companies.

Trade and other receivables, loans to company companies, cash and cash equivalents, and amounts owing by company companies are classified as loans and
receivables.

Trade and other payables and amounts owing to company companies are classified as financial liabilities

initial recognition and measurement

The Foundation classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument
in accordance with the substance of the contractual arrangement.
Financial instruments are recognised initially when the Foundation becomes a party to the contractual provisions of the instruments. Regular purchases and
sales of financial instruments are recognised on the trade-date - the date on which the Foundation commits to purchase or sell the instrument. Financial
instruments are initially recognised at fair value plus transaction costs.
subsequent measurement

Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.
Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

de-recognition

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Foundation has
transferred substantially all risks and rewards of ownership.

Financial liabilities (or a part of a financial liability) are removed from its statements of financial position when, and only when, they are extinguished - i.e. when
the obligation specified in the contract is discharged, cancelled or expired.

166