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FINANCIAL STATEMENTS
Axiata Group Berhad | Annual Report 2016
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3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Financial assets (continued)
(v) De-recognition
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred
and the Group and the Company have transferred substantially all risks and rewards of ownership.
Receivables that are factored out to banks and other financial institutions with recourse to the Group and the Company are not
derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The
corresponding cash received from the financial institutions is recorded as borrowings.
When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in OCI are reclassified to profit or loss.
(g) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount presented in the statements of financial position when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the
event of default, insolvency or bankruptcy.
(h) Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair
value at the end of each reporting period.
The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged. Derivatives that do not qualify for hedge accounting are classified as held for trading and accounted for
in accordance with the accounting policy set out in Note 3(f) to the financial statements. Derivatives that qualify for hedge accounting are
designated as either:
•
Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);
•
Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or
•
Hedges of a net investment in a foreign operation (net investment hedge).
The Group and the Company document at the inception of the transaction, the relationship between hedging instruments and hedged items,
as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group and the Company also
document its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in Note 19 to the financial statements. Movements
on the hedging reserve in OCI are shown in the statement of changes in equity of the financial statements. The full fair value of a hedging
derivative is classified as a non-current asset or liability when the remaining hedged item is more than twelve (12) months and as a current
asset or liability when the remaining maturity of the hedged item is less than twelve (12) months. Trading derivatives are classified as a current
asset or liability.