TAN CHONG MOTOR HOLDINGS BERHAD
Annual Report 2014
60
NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
(c) Financial instruments (continued)
(iv) Hedge accounting
Cash flow hedge
A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular
risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect
the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is
determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion
is recognised in profit and loss.
Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from
equity into profit or loss in the same period or periods during which the hedged forecast cash flows affect
profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised
in other comprehensive income is removed from equity and included in the initial amount of the asset or
liability. However, loss recognised in other comprehensive income that will not be recovered in one or more
future periods is reclassified from equity into profit or loss.
Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold,
terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected
to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative
gain or loss on the hedging instrument remains in equity until the forecast transaction occurs. When the
forecast transaction is no longer expected to occur, any related cumulative gain or loss recognised in other
comprehensive income on the hedging instrument is reclassified from equity into profit or loss.
(v) Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows
from the financial asset expire or control of the asset is not retained or substantially all risks and rewards of
ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the
difference between the carrying amount and the sum of the consideration received (including any new asset
obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity
is recognised in the profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract
is discharged, cancelled or expires. On derecognition of a financial liability, the difference between the
carrying amount of the financial liability extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
(d) Property, plant and equipment
(i)
Recognition and measurement
Items of property, plant and equipment, except for freehold land, are measured at cost/valuation less
accumulated depreciation and any accumulated impairment losses. Valuations will be performed with
sufficient regularity to ensure that the carrying amount does not differ materially from the fair value of the
land and buildings at the reporting date.
Freehold land is stated at valuation less any accumulated impairment losses.
