Page 294 - SAMRC AnnualReport 2025-26

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

1.9 Financial instruments – GRAP 104 (Previous policy applied in
comparative period) (continued)

Initial recognition
The entity recognises a financial asset or a financial liability in its statement of financial position when the
entity becomes a party to the contractual provisions of the instrument.
The entity recognises financial assets using trade date accounting.

Initial measurement of financial assets and financial liabilities
The entity measures a financial asset and financial liability initially at its fair value plus, in the case of a
financial asset or a financial liability not subsequently measured at fair value, transaction costs that are
directly attributable to the acquisition or issue of the financial asset or financial liability.

Subsequent measurement of financial assets and financial liabilities
The entity measures all financial assets and financial liabilities after initial recognition using the
following categories:
• Financial instruments at fair value.
• Financial instruments at amortised cost.

All financial assets measured at amortised cost, or cost, are subject to an impairment review. The factors taken
into account when considering impairment are solvency and whether the account holder is a slow payer.

Impairment and uncollectability of financial assets
The entity assesses at the end of each reporting period whether there is any objective evidence that a
financial asset or group of financial assets is impaired.
Financial assets are measured at amortised cost:

If there is objective evidence that an impairment loss on financial assets measured at amortised cost
has been incurred, the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have
not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount
of the asset is reduced through the use of an allowance account. The amount of the loss is recognised
in surplus or deficit.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed by adjusting an allowance account. The reversal does not result in a carrying
amount of the financial asset that exceeds what the amortised cost would have been had the impairment
not been recognised at the date the impairment is reversed. The amount of the reversal is recognised
in surplus or deficit.
If there is objective evidence that an impairment loss has been incurred on an investment in a residual
interest that is not measured at fair value because its fair value cannot be measured reliably, the amount
of the impairment loss is measured as the difference between the carrying amount of the financial asset
and the present value of estimated future cash flows discounted at the current market rate of return for
a similar financial asset. Such impairment losses are not reversed.

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