KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
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Notes to the financial statements
3 Significant accounting policies (Cont’d)
3.7 Financial instruments (Cont’d)
(ii)
Non-derivative financial liabilities
All other financial liabilities (including liabilities designated at fair value through profit or loss) are
recognised initially on the trade date, which is the date that the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled
or when they expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to offset the amounts and intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group classifies its non-derivative liabilities into the other financial liabilities category. Such financial
liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured at amortised cost using the effective interest
method.
Other financial liabilities comprise loans and borrowings, and trade and other payables.
(iii) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity, net of any tax effects.
Dividends on ordinary shares are recognised as a liability in the period in which they are declared.
(iv) Financial guarantees
Financial guarantees are financial instruments issued by the Company that require the issuer to make
specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet
payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantees are recognised initially at fair value and are classified as financial liabilities.
Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair
value less cumulative amortisation and the amount that would be recognised if they were accounted for
as contingent liabilities. When financial guarantees are terminated before their original expiry date, the
carrying amount of the financial guarantee is transferred to profit or loss.
3.8 Impairment
(i)
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting
period to determine whether there is objective evidence that it is impaired. A financial asset is impaired
if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and
that the loss event has an impact on the estimated future cash flows of that asset that can be estimated
reliably.
