BLUE LLAMA LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 NOVEMBER 2022
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Revenue is recognised when the digitial assets held as stock are disposed of. The company can make a trading loss upon disposal, and thus incur negative revenue, which is recognised when the amount of gain/loss can be measured reliably.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
The Company only enters into basic financial instrument transactions that result in the recognition of
financial assets and liabilities like trade and other debtors and creditors, loans from banks and other
third parties, loans to related parties and investments in ordinary shares.
(i) Financial assets
Basic financial assets, including trade and other debtors, and amounts due from related companies,
are initially recognised at transaction price, unless the arrangement constitutes a financing
transaction, where the transaction is measured at the present value of the future receipts discounted
at a market rate of interest.
Such assets are subsequently carried at amortised cost using the effective interest method. At the
end of each reporting period financial assets measured at amortised cost are assessed for objective
evidence of impairment. If an asset 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 original
effective interest rate. The impairment loss is recognised in the Statement of Income and Retained
Earnings.
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