Page 123 - S P Setia Annual Report 2016
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S P Setia Berhad Group                                                                                121
          Annual Report 2016




                                                                               Notes To The Financial Statements

                                                                                  For The Financial Year Ended 31 December 2016

          1.   SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
              (n)  Inventories


                   Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis. In the
                   case of finished goods and work-in-progress, cost comprises materials, direct labour, other direct charges and an appropriate
                   proportion of factory overheads.

                   In the case of completed properties held for sale, cost is determined based on specific identification method.

                   Net realisable value represents the estimated selling price in the ordinary course of business, less selling and distribution costs
                   and all other estimated cost to completion.

              (o)   Financial instruments

                   A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity
                   instrument of another enterprise.

                   (i)   Initial recognition and measurement

                       A financial instrument is recognised in the financial statements when the Company or any of its subsidiaries becomes a
                       party to the contractual provisions of the instrument.

                       A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value
                       through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

                   (ii)   Financial instrument categories and subsequent measurement

                       Financial assets

                       Financial assets are classified as either financial assets at fair value through profit or loss, loans and receivables, held-
                       to-maturity investments or available-for-sale financial assets, as appropriate. Management determines the classification
                       of the financial assets upon initial recognition as set out below. The Group and the Company only have financial assets
                       categorised as loans and receivables.

                       Loans and receivables

                       This category comprises debt instruments that are not quoted in an active market, trade and other receivables and cash
                       and cash equivalents. They are included in current assets, except for maturities longer than 12 months after the reporting
                       period, which are classified as non-current assets.

                       The subsequent measurement of financial assets in this category is at amortised cost using the effective interest method,
                       less allowance for impairment losses. Any gains or losses arising from derecognition or impairment, and through the
                       amortisation process of loans and receivables are recognised in profit or loss.

                       Known bad debts are written off and allowance is made for any receivables considered to be doubtful of collection.

                       Financial liabilities

                       Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities at
                       amortised cost.

                       The Group and the Company only have financial liabilities categorised as financial liabilities at amortised cost which are
                       measured using the effective interest method and are recognised in profit or loss.
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