Page 133 - SC Annual Report 2018 (ENG)

Securities
Commission
Malaysia
ANNUAL
REPORT
2018

Previous financial year

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

An embedded derivative was recognised separately from the host contract and accounted
for as a derivative if, and only if, it was not closely related to the economic characteristics
and risks of the host contract and the host contract was not recognised as fair value
through profit or loss. The host contract, in the event an embedded derivative was
recognised separately, was accounted for in accordance with policy applicable to the
nature of the host contract.

(ii) Financial instrument categories and subsequent measurement

Financial assets

current financial year

Categories of financial assets are determined on initial recognition and are not reclassified
subsequent to their initial recognition unless the SC changes its business model for
managing financial assets in which case all affected financial assets are reclassified on the
first day of the first reporting period following the change of the business model.

(a) Amortised cost

Amortised cost category comprises financial assets that are held within a business
model whose objective is to hold assets to collect contractual cash flows and its
contractual terms give rise on specified dates to cash flows that are solely for
payments of principal and interest on the principal amount outstanding. The
financial assets are not designated as fair value through profit or loss. Subsequent
to initial recognition, these financial assets are measured at amortised cost using
the effective interest method. The amortised cost is reduced by impairment losses.
Interest income, foreign exchange gains and losses and impairment are recognised
in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Interest income is recognised by applying effective interest rate to the gross
carrying amount except for credit impaired financial assets (see Note 2(d)(i)) where
the effective interest rate is applied to the amortised cost.

Previous financial year

In the previous financial year, the financial assets of the SC were classified under MFRS
139, Financial Instruments: Recognition and Measurement as follows:

(a) Held-to-maturity

Held-to-maturity investments category comprises debt instruments that were
quoted in an active market and the SC had the positive intention and ability to
hold them to maturity.

Financial assets categorised as held-to-maturity investments were subsequently
measured at amortised cost using the effective interest method.

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