Basic financial assets, which include debtors and cash at bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at the market rate of interest. Financial assets are classified as receivable within one year and not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilites, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initailly recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at thr present value of the future payments discounted at the market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for good or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non current liabilities. Trade creditors are recognised initially at transaction price ans subsequently measured at amortised cost using the effective interest method.
Equity Instruments
Equity instruments issued by the compamy are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.