Page 129 - Urban Renewal Authority 2023-24 Annual Report

2. Material accounting policies (Continued)

(i) Financial assets and liabilities
The Group classifies its financial assets in the following categories: financial assets measured at
amortised cost, at FVPL and at fair value through other comprehensive income (“FVOCI”). The
classification of the financial asset is based on the business model under which the financial asset is
managed and its contractual cash flow characteristics. Management determine the classification of its
financial assets at initial recognition.

The Group’s policies for investments in debt securities are set out below.

Investments in debt securities are recognised/derecognised on the date the Group commits to
purchase/sell the investment. The investments are initially stated at fair value plus directly attributable
transaction costs, except for those investments measured at FVPL for which transaction costs are
recognised directly in profit or loss. These investments are subsequently accounted for as follows,
depending on their classification:

– amortised cost, if the investment is held for the collection of contractual cash flows which
represent solely payments of principal and interest. Interest income from the investment is
calculated using the effective interest method.

– FVOCI — recycling, if the contractual cash flows of the investment comprise solely payments of
principal and interest and the investment is held within a business model whose objective is
achieved by both the collection of contractual cash flows and sale. Changes in fair value are
recognised in other comprehensive income, except for the recognition in profit or loss of
expected credit losses, interest income (calculated using the effective interest method) and
foreign exchange gains and losses. When the investment is derecognised, the amount
accumulated in other comprehensive income is recycled from equity to profit or loss.

– FVPL, if the investment does not meet the criteria for being measured at amortised cost or
FVOCI (recycling). Changes in the fair value of the investment (including interest) are recognised
in profit or loss.

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. Investments at FVPL are initially recognised at fair value
and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights
to receive cash flows from the investments have expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership.

Financial liabilities are recognised initially at fair value, net of transaction costs incurred. Financial
liabilities are subsequently carried at amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit or loss over the period of the
borrowings using the effective interest method.

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