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NOTES TO FINANCIAL STATEMENTS
(Expressed in Bahamian Dollars)
December 31, 2018
3. SuMMARY OF SIgNIFICANT ACCOuNTINg pOLICIES (CONTINuED)
Financial Instruments – initial recognition, subsequent measurement, and impairment effective January 1, 2018
(continued)
For other financial assets such as loan receivable and receivable from related parties, ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL) (Stage 1). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL) (Stage 2). As the Company maintains cash balances with the highly reputable financial institutions in The Bahamas with low credit risk, the Company applies the low credit risk simplification approach under IFRS 9 for cash.
As of January 1, 2018 and December 31, 2018, there were expected credit losses are identified in respect of cash, loan receivable, receivable from related parties and these financial assets are considered to be in stage 1.
Financial Liabilities
Initial Recognition, Classification and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or at amortized cost. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include accounts payable and accrued liabilities, and security deposits.
Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Company has no financial liability held for trading and has not designated any financial liability as at fair value through profit or loss.
Financial liabilities at amortized cost
After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest method. This category applies to accounts payable and accrued liabilities, and security deposits.
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BAHAMAS WASTE LIMITED ANNUAL REPORT 2018