Page 50 - Nanyang Technological University

NOTES TO
FINANCIAL STATEMENTS (CONT’D)

31 March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.8 Financial instruments (cont’d)

Non-derivative financial liabilities (cont’d)

Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a
net basis or to realise the asset and settle the liability simultaneously.

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such
financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the
effective interest method.

Non-derivative financial liabilities comprise loans and borrowings, and other payables and accruals.

Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management
are included as a component of cash and cash equivalents for the purpose of the consolidated statement
of cash flows.

Derivative financial instruments and hedging instruments

The Group holds derivative financial instruments, through its external fund managers, to hedge its foreign
currency exposure. Further details of derivative financial instruments are disclosed in Note 9 to the
financial statements.

Embedded derivatives are separated from the host contract and accounted for separately if the economic
characteristics and risks of the host contract and the embedded derivative are not closely related, a
separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative, and the combined instrument is not measured at fair value through profit or loss.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the profit or
loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein accounted for in the profit or loss.

48 NTU ANNUAL REPORT 2015