| (v) | Financial assets and liabilities |
The Company classifies its financial assets and liabilities in the following categories: (
1
) at fair value through profit or loss, (
2
) loans and receivables, (
3
) held to maturity and (
4
) available for sale. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial assets at initial recognition.
1
) Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities at fair value through profit or loss are financial instruments held for trading. A financial asset is classified in this category if acquired principally for the purpose of being sold in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges.
In general, financial instruments of this category are classified as short-term investments securities, on current assets. Investments with maturities beyond
one
year
may
be classified as short-term based on Management's intent and ability to withdraw them within less than
one
year, as well as, considering their highly liquid nature and the fact that they represent cash available to fund current operations.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not
quoted in an active market. They are included in current assets, except for maturities greater than
12
months after the end of the reporting period (these are classified as non-current assets).
3
) Investments held to maturity
Investments held to maturity are financial assets acquired with the intention and financial ability to hold them in the portfolio until maturity.
4
) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets
not
classified in any other category. Available-for-sale financial assets are classified as non-current assets, unless Management intends to dispose of the investment within
12
months of the end of the reporting period.
Investments in debt and equity securities are classified in this category. Equity instruments are undertakings in which the Company does
not
have significant influence or control.
Recognition and measurement
Purchases and sales of financial assets and liabilities are recognized on the trade date - the date on which the Company undertakes to buy or sell the asset.
Financial assets and liabilities are realized when the rights to receive cash flows from investments have expired or have been transferred, in this case, when the Company has transferred substantially all risks and benefits of ownership.
1
) Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities at fair value through profit and loss are initially recognized at fair value and transaction costs are charged to the income statement. Subsequently, they are carried at fair value. Gains or losses arising from changes in the fair value of financial instruments at fair value through profit or loss are presented in the income statement in the period in which they arise.
Loans and receivables are carried at amortized cost using the effective interest rate.
3
) Investments held to maturity
Investments held to maturity are initially recognized at fair value plus any directly attributable transaction costs. After initial recognition, investments held to maturity are measured at amortized cost using the effective interest method, reduced by any on loss impairment.
4
) Available-for-sale financial assets
Available-for-sale financial assets are initially measured at fair value. Interest and inflation monetary adjustments are recognized in income. Subsequently, available-for-sale financial assets are measured at fair value, with changes in fair value recognized in other comprehensive income, and interests (measured using the effective interest rate method), recognized in income statement.
When available-for-sale financial assets are settled or become impaired, the accumulated fair value adjustments recognized in other comprehensive income are included in the income statement.
The fair values of investments with public quotations are based on current bid prices. If the market for a financial asset (and for unlisted securities on the stock exchange) is
not
active, the Company establishes fair value by using valuation techniques. These techniques include the use of recent transactions with
third
parties, reference to other instruments that are substantially similar, analysis of discounted cash flows and option pricing models making maximum use of information from the market and with the least possible information generated by the Company's management.
Impairment of financial assets
Management assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. If any such indication exists, the asset’s recoverable amount is estimated. A financial asset or a group of financial assets is impaired and an impairment loss is recorded only if there is objective evidence of impairment as a result of
one
or more events that occurred after the initial recognition of the asset (“loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount presented in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
