Page 285 - SAMRC AnnualReport 2025-26

F I NAN C IAL I N F O R MA T I O N

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2026
SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

1.8 Financial instruments (continued)

Gross carrying amount of a financial asset is the amortised cost of a financial asset, before adjusting for
any loss allowance.

A financial asset or financial liability that is held for trading:
(a) is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

(b) on initial recognition is part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

(c) is a derivative (except for a derivative that is a financial guarantee contract).
Impairment gain or loss is a gain or loss that is recognised in surplus or deficit in accordance with
paragraph 5.23 and 5.36.
Lifetime expected credit losses are the expected credit losses that result from all possible default events
over the expected life of a financial instrument.
Loss allowance is the allowance for expected credit losses on financial assets measured in accordance
with paragraph 4.2 , lease receivables and the provision for expected credit losses on loan commitments
and financial guarantee contracts.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities that are settled by delivering cash or another financial asset.
Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions.

Loans payable are financial liabilities, other than short-term payables on normal credit terms.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and
other price risk.

Modification gain or loss is the amount arising from adjusting the gross carrying amount of a financial
asset to reflect the renegotiated or modified contractual cash flows. The entity recalculates the gross
carrying amount of a financial asset as the present value of the estimated future cash payments or
receipts through the expected life of the renegotiated or modified financial asset that are discounted
at the financial asset’s original effective interest rate (or the original credit-adjusted effective interest
rate for purchased or originated credit-impaired financial assets). When estimating the expected cash
flows of a financial asset, an entity shall consider all contractual terms of the financial asset (for example,
prepayment, call and similar options) but shall not consider the expected credit losses, unless the
financial asset is a purchased or originated credit-impaired financial asset, in which case an entity shall
also consider the initial expected credit losses that were considered when calculating the original credit-
adjusted effective interest rate.
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices (other than those arising from interest rate risk or currency risk),
whether those changes are caused by factors specific to the individual financial instrument or its issuer,
or factors affecting all similar financial instruments traded in the market.

A financial asset is past due when a counterparty has failed to make a payment when that payment was
contractually due.

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