68 EXCEL FORCE MSC BERHAD Notes to the Financial Statements (cont’d) 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (f) Financial assets (cont’d) Financial asset categories and subsequent measurement (cont’d) The Group and the Company classify their financial assets as follows: (i) Financial assets at amortised cost The Group and the Company measure financial assets at amortised cost if both of the following conditions are met: • The financial asset is held within a businessmodel with the objective to hold financial assets in order to collect contractual cash flows; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortised cost are subsequently measured using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss. The Group and the Company’s financial assets at amortised cost include trade and other receivables, amount due from subsidiary companies and deposits, cash and bank balances and short-term funds. (ii) Financial assets at fair value through other comprehensive income (“FVTOCI”) (a) Debt instruments A debt security is measured at FVTOCI if it meets both of the following conditions and is not designated as at FVTPL: • It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and • Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. (b) Equity instruments On initial recognition of an equity investment that is not held for trading, the Group and the Company may irrevocably elect to present subsequent changes in fair value in other comprehensive income on an investment-by-investment basis. Financial assets categorised as FVTOCI are subsequently measured at fair value, with unrealised gains and losses recognised directly in other comprehensive income and accumulated under fair value reserve in equity. For debt instruments, when the investment is derecognised or determined to be impaired, the cumulative gain or loss previously recorded in equity is reclassified to the profit or loss. For equity instruments, the gains or losses are never reclassified to profit or loss. The Group’s and the Company’s financial assets at FVTOCI comprise other investments.
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