The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtor 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 future cash flows and subsequently 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 un-discounted amount of the cash or other consideration 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 market rate of interest for 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 public benefit entity of concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence and impairment. If objective evidence of impairment is found, an impairment loss if recognised in the Statement of Comprehensive Income.