Financial assets
Basic financial assets, including cash and cash equivalents, trade debtors, other debtors and amounts owed by group undertakings, are initially recognised at transaction price.
Such assets are subsequently carried at amortised cost using the undiscounted amount of cash or other consideration expected to be received and at the end of each reporting period are assessed for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.
Financial liabilities
Basic financial liabilities, including trade creditors, other creditors and amounts owed to group undertakings, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Offsetting
Financial assets and liabilities are offset, and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.