Page 286 - SAMRC AnnualReport 2025-26

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

1.8 Financial instruments (continued)

Reclassification date is:
(a) the first day of the first reporting period following the change in management model that results in
an entity reclassifying financial assets; and
(b) the date on which a reliable measure of fair value ceases to be, or becomes, available for an investment
in a residual interest that meets the criteria in paragraph 4.5.
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal
of a financial asset or financial liability (see Appendix A paragraph AG5.57). An incremental cost is one
that would not have been incurred if the entity had not acquired, issued or disposed of the financial
instrument.

Initial Recognition
The entity recognises a financial asset or a financial liability in its statement of financial position when it
becomes a party to the contractual provisions of the instrument.

Classification
Classification of Financial Assets
The entity classifies financial assets as subsequently measured at amortised cost or fair value through
surplus or deficit on the basis of both:
(a) the entity’s management model for managing the financial assets; and

(b) the contractual cash flow characteristics of the financial asset.
A financial asset is measured at amortised cost if both of the following conditions are met:

(a) the financial asset is held within a management model whose objective is to hold financial assets in
order to collect contractual cash flows; and

(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

For the purpose of applying (b) above:

• Principal is the fair value of the financial asset at initial recognition
• Interest consists of consideration for the time value of money, for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and
costs, as well as a profit margin (where applicable).

A financial asset is measured at fair value through surplus or deficit unless it is measured at amortised
cost or cost.

Investments in residual interests are measured at fair value through surplus or deficit. As a practical
expedient, an investment in a residual interest whose fair value cannot be reliably measured is measured
at cost. If a reliable measure of fair value becomes available, the investment is measured at fair value
through surplus or deficit.

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