The company has elected to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.
Basic financial assets and liabilities, including trade, other receivables and payables, cash, bank and loan balances are initially recognised at transaction price.
Such assets and liabilities are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period financial assets and liabilities measured at amortised cost are assessed for objective evidence of impairment.
If an asset or liability is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s or liability’s original effective interest rate.The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment
reversal is recognised in profit or loss.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price.
Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.