AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 124 Financial assets with embedded derivatives are considered in their entirety when determining whether their cash lows are solely payments of principal and interest (“SPPI”). Debt instruments Subsequent measurement of debt instruments depends on the Group’s and the Fund’s business model for managing the asset and the cash low characteristics of the asset. There are three measurement categories into which the Group and the Fund classify their debt instruments: (a) Amortised cost Assets that are held for collection of contractual cash lows where those cash lows represent SPPI are measured at amortised cost. Proit income from these inancial assets is included in investment revenue using the efective proit rate method. Any gain or loss arising on derecognition is recognised directly in proit or loss and presented in other income/ (losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in proit or loss. (b) Fair Value through Other Comprehensive Income (“FVTOCI”) Assets that are held for collection of contractual cash lows and for selling the inancial assets, where the assets’ cash lows represent SPPI, are measured at FVTOCI. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment gains or losses, proit income and foreign exchange gains and losses which are recognised in proit or loss. When the inancial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassiied from equity to proit or loss and recognised in other income/(losses). Proit income from these inancial assets is included in investment revenue using the efective proit rate method. Foreign exchange gains and losses are presented in other income/(losses) and impairment expenses are presented as separate line item in proit or loss. Changes in the fair value of inancial assets at FVTPL are recognised in other income/(losses) in proit or loss as applicable. (c) Fair Value through Proit or Loss (“FVTPL”) Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. The Group and the Fund may also irrevocably designate inancial assets at FVTPL if doing so signiicantly reduces or eliminates a mismatch created by assets and liabilities being measured on diferent bases. Fair value changes is recognised in proit or loss and presented net within other income/(losses) in the period which it arises. Equity instruments The Group and the Fund subsequently measure all equity investments at fair value. Where the Group’s and the Fund’s management have elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassiication of fair value gains and losses to proit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in proit or loss as other income when the Group’s and the Fund’s right to receive payments is established. Changes in the fair value of inancial assets at FVTPL are recognised in other income/(losses) in proit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not reported separately from other changes in fair value.