AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 123 When some or all of the economic beneits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Financial Instruments MFRS 9 replaces the provisions of MFRS 139 that relate to the recognition, classiication and measurement of inancial assets and inancial liabilities, derecognition of inancial instruments and impairment of inancial assets. The adoption of MFRS 9 Financial Instruments from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the inancial statements. The Group and Fund have elected to apply the limited exemption in MFRS 9 relating to transition for classiication and measurement and impairment, and accordingly has not restated comparative periods in the year of initial application. As a consequence: (a) any adjustments to carrying amounts of inancial assets or liabilities are recognised at the beginning of the current reporting period, with the diference recognised in opening retained earnings, (b) inancial assets are not reclassiied in the statements of the inancial positons for the comparative period, (c) provisions for impairment have not been restated in the comparative period. Financial Assets - classiication and measurement Accounting policies applied from 1 January 2018 (i) Classiication From 1 January 2018, the Group and the Fund classify their inancial assets in the following measurement categories: • those to be measured subsequently at fair value (either through other comprehensive income or through proit or loss), and • those to be measured at amortised cost The classiication depends on the entity’s business model for managing the inancial assets and the contractual terms of the cash lows. For assets measured at fair value, gains and losses will either be recorded in proit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, the Group and the Fund have made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (“FVTOCI”). The Group and the Fund reclassify debt investments when and only when the businessmodel for managing those assets changes. (ii) Recognition and derecognition Regular way purchases and sales of inancial assets are recognised on trade-date, the date on which the Group and the Fund commit to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash lows from the inancial assets have expired or have been transferred and the Group and the Fund have transferred substantially all the risks and rewards of ownership. (iii) Measurement At initial recognition, the Group and the Fund measure a inancial asset at its fair value plus, in the case of a inancial asset not at fair value through proit or loss (“FVTPL”), transaction costs that are directly attributable to the acquisition of the inancial asset. Transaction costs of inancial assets carried at FVTPL are expensed in proit or loss.