M&K INVESTMENT PROPERTIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MAY 2024
2.Accounting policies (continued)
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Investment property is carried at fair value determined annually by the directors and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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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.
Debt instruments (other than those wholly repayable or receivable within one year), including loans
and other accounts receivable 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 payable or receivable within one year, typically trade debtors and creditors, are measured,
initially and subsequently, at the undiscounted amount of the cash or other consideration expected
to be paid or received. 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 in
case of an out-right short-term loan that is not at market rate, the financial asset or liability is
measured, initially at the present value of future cash flows discounted at a market rate of interest
for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a
director in the case of a small company, or a public benefit entity concessionary loan.
Investments in non-derivative instruments that are equity to the issuer are measured:
- at fair value with changes recognised in the Statement of Comprehensive Income if the
shares are publicly traded or their fair value can otherwise be measured reliably;
- at cost less impairment for all other investments.
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