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AirAsia X Berhad • Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u)
Contingent liabilities
The Group and Company do not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation
that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group and Company, or a present obligation that
is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare
circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.
The Group and Company recognise separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values
can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions.
Subsequent to the initial recognition, the Group and Company measure the contingent liabilities that are recognised separately at the date of acquisition at the higher
of the amount that would be recognised in accordance with the provisions of MFRS 137 “Provisions, Contingent Liabilities and Contingent Assets” and the amount
initially recognised less, when appropriate, cumulative amortisation recognised in accordance with MFRS 118 “Revenue”.
(v)
Financial assets
(i)
Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on
the purpose for which the financial assets were acquired. Management determines the classification at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired or incurred
principally for the purpose of selling or repurchasing it in the near term. Derivatives are also categorised as held for trading unless they are designated as
hedges (see Note 2(k)). Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as
non-current.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in
current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s and
Company’s loans and receivables comprise ‘trade and other receivables’, ‘amounts due from related parties’, ‘amount due from an associate’ and ‘deposits, cash
and bank balances’ in the balance sheet.
(ii)
Recognition and initial measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets
carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss.
(iii)
Subsequent measurement – gains and losses
Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using
the effective interest method.
Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interest and dividend income are
recognised in the income statement in the period in which the changes arise.
