KINGSMEN CREATIVES LTD
ANNUAL REPORT
2014
53
2.
Summary of significant accounting policies (cont’d)
Financial assets (cont’d)
Available-for-sale financial assets (cont’d)
Changes in the fair value of non-functional currency denominated investments classified as available-for-sale are
analysed between translation differences and other changes in the carrying amount of the investments. The translation
differences on monetary investments are recognised in profit or loss measured based on the amortised cost of the
monetary investments; translation differences on non-monetary investments are recognised in other comprehensive
income. Interest income calculated using the effective interest method and dividends are recognised in profit or
loss. Other changes in the carrying amount of the investments classified as available-for-sale are recognised in other
comprehensive income.
Cash and cash equivalents
Cash and cash equivalents include bank and cash balances, on demand deposits and any highly liquid debt
instruments purchased with an original maturity of three months or less. For the statement of cash flows, the item
includes cash and cash equivalents less cash subject to restriction and bank overdrafts payable on demand that form
an integral part of cash management.
Classification of equity and liabilities
A financial instrument is classified as a liability or as equity in accordance with the substance of the contractual
arrangement on initial recognition. Equity instruments are contracts that give a residual interest in the net assets
of the Group. Where the financial instrument does not give rise to a contractual obligation on the part of the issuer
to make payment in cash or kind under conditions that are potentially unfavourable, it is classified as an equity
instrument. Ordinary shares are classified as equity. Equity instruments are recognised at the amount of proceeds
received net of incremental costs directly attributable to the transaction. Dividends on equity are recognised as
liabilities when they are declared. Interim dividends are recognised when declared by the directors.
Treasury shares
Where the Company reacquires its own equity instruments as treasury shares, the consideration paid, including any
directly attributable incremental cost is deducted from equity attributable to the Company’s owners until the shares
are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration
received, net of any directly attributable incremental transaction costs and the related income tax effects, is included
in equity attributable to the Company’s owners and no gain or loss is recognised in profit or loss. Voting rights
relating to the treasury shares are nullified for the Company and no dividends are allocated to them.
Financial liabilities
A financial liability is recognised on the statement of financial position when, and only when, the Group becomes
a party to the contractual provisions of the instrument and it is derecognised when the obligation specified in the
contract is discharged or cancelled or expires. The initial recognition of financial liability is at fair value normally
represented by the transaction price. The transaction price for financial liability not classified at fair value through
profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial
liability. Transaction costs incurred on the acquisition or issue of financial liability classified at fair value through profit
or loss are expensed immediately. The transactions are recorded at the trade date. Financial liabilities including bank
and other borrowings are classified as current liabilities unless there is an unconditional right to defer settlement of
the liability for at least 12 months after the end of the reporting period.
The Group’s financial liabilities include liabilities at fair value through profit or loss and other financial liabilities.
Subsequent measurement of the financial liabilities is as follows:
Liabilities at fair value through profit or loss
Liabilities are classified in this category when they are incurred principally for the purpose of selling or repurchasing
in the near term (trading liabilities) or are derivatives (except for a derivative that is a designated and effective hedging
instrument) or have been classified in this category because the conditions are met to use the “fair value option”
and it is used. Financial guarantee contracts if significant are initially recognised at fair value and are subsequently
measured at the greater of (a) the amount measured in accordance with FRS 37 Provisions, Contingent Liabilities
and Contingent Assets and (b) the amount initially recognised less, where appropriate, cumulative amortisation
recognised in accordance with FRS 18 Revenue. All changes in fair value relating to liabilities at fair value through
profit or loss are charged to profit or loss as incurred.
Other financial liabilities
All liabilities, which have not been classified as in the previous category fall into this residual category. These
liabilities are carried at amortised cost using the effective interest method. Trade and other payables and borrowings
are usually classified in this category. Items classified within current trade and other payables are not usually re-
measured, as the obligation is usually known with a high degree of certainty and settlement is short-term.
Notes to the Financial Statements
31 December 2014
