Fraser & Neave Holdings Bhd Annual Report 2021

2. SIGNIFICANT ACCOUNTING POLICIES #CONTINUED$ #C$ FINANCIAL INSTRUMENTS #CONTINUED$ (ii) Financial instrument categories and subsequent measurement (continued) Financial assets (continued) (b) Fair value through profit or loss All financial assets not measured at amortised cost as described above are measured at fair value through profit or loss. This includes derivative financial assets (except for a derivative that is a designated and e!ective hedging instrument). On initial recognition, the Group or the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets categorised as fair value through profit or loss are subsequently measured at their fair value. Net gains or losses, including any interest or dividend income, are recognised in the profit or loss. All financial assets, except for those measured at fair value through profit or loss are subject to impairment assessment (see Note 2(k)(i)). Financial liabilities The categories of financial liabilities at initial recognition are as follows: (a) Fair value through profit or loss Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and e!ective hedging instrument), contingent consideration in a business combination and financial liabilities that are specifically designated into this category upon initial recognition. On initial recognition, the Group or the Company may irrevocably designate a financial liability that otherwise meets the requirements to be measured at amortised cost as at fair value through profit or loss: • if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise; • a group of financial liabilities or assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the Group’s key management personnel; or • if a contract contains one or more embedded derivatives and the host is not a financial asset in the scope of MFRS 9, where the embedded derivative significantly modifies the cash flows and separation is not prohibited. Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value with gains or losses, including any interest expense are recognised in the profit or loss. For financial liabilities where it is designated as fair value through profit or loss upon initial recognition, the Group and the Company recognise the amount of change in fair value of the financial liability that is attributable to change in credit risk in the other comprehensive income and remaining amount of the change in fair value in the profit or loss, unless the treatment of the e!ects of changes in the liability’s credit risk would create or enlarge an accounting mismatch. (b) Amortised cost Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the e!ective interest method. Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss. Financial Statements 181 Fraser & Neave Holdings Bhd ! Annual Report 2021