Page 83 - ar2012

Notes to the Financial Statements
For the fnancial year ended 31 December 2012
3. Summary of significant accounting policies (cont’d)
3.20 Financial liabilities (cont’d)
Subsequent measurement (cont’d)
(a) Financial liabilities at fair value through proft or loss (cont’d)
Subsequent to initial recognition, fnancial liabilities at fair value through proft or loss are measured at fair value. Any gains
or losses arising from changes in fair value of the fnancial liabilities are recognised in proft or loss.
The Group has not designated any fnancial liabilities upon initial recognition at fair value through proft or loss.
(b) Other fnancial liabilities
After initial recognition, other fnancial liabilities are subsequently measured at amortised cost using the effective interest rate
method. Gains and losses are recognised in proft or loss when the liabilities are derecognised, and through the amortisation
process.
De-recognition
A fnancial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing
fnancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modifed, such an exchange or modifcation is treated as a de-recognition of the original liability and the recognition
of a new liability, and the difference in the respective carrying amounts is recognised in proft or loss.
3.21 Financial guarantee
A fnancial guarantee contract is a contract that requires the issuer to make specifed payments to reimburse the holder for a loss
it incurs because a specifed debtor fails to make payment when due in accordance with the terms of a debt instrument.
Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to
the issuance of the guarantee. Subsequent to initial recognition, fnancial guarantees are recognised as income in the consolidated
statement of comprehensive income over the period of the guarantee. If it is probable that the liability will be higher than the amount
initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to the consolidated
statement of comprehensive income.
3.22 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction
or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use
or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are
substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing
costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
3.23 Employee benefts
(a) Defned contribution plans
The Group participates in the national pension schemes as defned by the laws of the countries in which it has operations.
Contributions to national pension schemes are recognised as an expense in the period in which the related service is
performed. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme
in Singapore, a defned contribution pension scheme.
Indofood Agri Resources Ltd. • Annual Report 2012 81