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Fima Corporation Berhad

(21185-P)

financial statements

108

NOTES TO THE FINANCIAL STATEMENTS

2.

SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)

2.3 Summary of Significant Accounting Policies (Cont’d.)

(n) Financial Liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the

definitions of a financial liability.

Financial liabilities within the scope of FRS 139 Financial Instruments: Recognition and Measurement, are recognised

in the statement of financial position when, and only when, the Group and the Company become a party to the

contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair

value through profit or loss or other financial liabilities.

(i)

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading or financial

liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading includes derivatives entered into by the Group that do not meet the hedge

accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value,

with any resultant gains or losses recognised in profit or loss. Net gain or losses on derivatives include exchange

differences.

(ii) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and amounts

due to related companies.

Trade payables, other payables and amounts due to related companies are recognised initially at fair value plus

directly attributable transaction costs and subsequently measured at amortised cost using the effective interest

method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently

measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities,

unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the

reporting date.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial

liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability

are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and

the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.