The company only enters into basic financial instrument transactions that result in a 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 non-puttable ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts recieveable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are apyable or receivable within one year, typically trade debtors and creditors, are measured intially abd subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or recieved. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or finance at a market rate of interest that it is not a market rate or in the case of an out-right short term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt intstrument and subsequently at amortised cost.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impariment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account.
For fianncial assets measured at cost less impariment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for the asset if ti were to be sold at the balance sheet date.
Financial assets and laibilities 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.
Debtors
Short term debtors are measured at transaction price, less impariment.
Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more that 24 hours. Cash equivelents 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 insignifcant risk in change of value.
Creditors
Short term creditors are measured at the transaction price