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57 56 Best World International Limited
Annual Report 2011
Best World International Limited
Annual Report 2011
2. Summary of Signifcant Accounting Policies (Cont’d)
Financial Assets ( Cont’d)
3. Held-to-maturity fnancial assets: These are non-derivative fnancial assets with fxed or determinable
payments and fxed maturity that the entity has the positive intention and ability to hold to maturity.
Financial assets that upon initial recognition are designated as at fair value through proft or loss or
available-for-sale and those that meet the defnition of loans and receivables are not classifed in this
category. These assets are carried at amortised costs using the effective interest method minus any
reduction (directly or through the use of an allowance account) for impairment or uncollectibility.
Impairment charges are provided only when there is objective evidence that an impairment loss has
been incurred. For impairment, the carrying amount of the asset is reduced through use of
an allowance account. The gains and losses are recognised in proft or loss when the investments are
derecognised or impaired, as well as through the amortisation process. Impairment losses recognised
in proft or loss are subsequently reversed if an increase in the fair value of the instrument can be
objectively related to an event occurring after the recognition of the impairment loss. Non-current
investments in bonds and debt securities are classifed in this category.
4. Available-for-sale fnancial assets: As at end of the reporting year date there were no fnancial asset
classifed in this category.
Cash and cash equivalents
Cash and cash equivalents include bank and cash balances, on demand deposits and any highly liquid debt
instruments purchased with an original maturity of three months or less. For the statement of cash fows
the item includes cash and cash equivalents less cash subject to restriction and bank overdrafts payable
on demand that form an integral part of cash management.
Financial Liabilities
Initial recognition, measurement and derecognition:
A fnancial liability is recognised on the statement of fnancial position when, and only when, the entity
becomes a party to the contractual provisions of the instrument and it is derecognised when the obligation
specifed in the contract is discharged or cancelled or expires. The initial recognition of fnancial liability
is at fair value normally represented by the transaction price. The transaction price for fnancial liability
not classifed at fair value through proft or loss includes the transaction costs that are directly attributable
to the acquisition or issue of the fnancial liability. Transaction costs incurred on the acquisition or issue of
fnancial liability classifed at fair value through proft or loss are expensed immediately. The transactions
are recorded at the trade date. Financial liabilities including bank and other borrowings are classifed
as current liabilities unless there is an unconditional right to defer settlement of the liability for at least
12 months after the end of the reporting year.
2. Summary of Signifcant Accounting Policies (Cont’d)
Financial Liabilities (Cont’d)
Subsequent measurement:
Subsequent measurement based on the classifcation of the fnancial liabilities in one of the following two
categories under FRS 39 is as follows:
1. Liabilities at fair value through proft or loss: At the end of the reporting year date there were no fnancial
liabilities classifed in this category.
2. Other fnancial liabilities: All liabilities, which have not been classifed in the previous category fall
into this residual category. These liabilities are carried at amortised cost using the effective interest
method. Trade and other payables and borrowing are usually classifed in this category. Items
classifed within current trade and other payables are not usually re-measured, as the obligation is
usually known with a high degree of certainty and settlement is short-term.
Financial Guarantees
A fnancial guarantee contract requires that the issuer makes specifed payments to reimburse the
holder for a loss when a specifed debtor fails to make payment when due. Financial guarantee contracts
are initially recognised at fair value and are subsequently measured at the greater of (a) the amount
determined in accordance with FRS 37 and (b) the amount initially recognised less, where appropriate,
cumulative amortisation recognised in accordance with FRS 18.
NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2011