/ . 7 2
E U R O S P O R T S G L O B A L L I M I T E D
Notes to
the F iNaNci al statemeNts
3 1 ma r ch 2 0 1 5
2 .
Summa r y o f S i gn i f i c an t ac coun t i ng Po l i c i e s ( Con t ’ d )
Financial Liabilities
Initial recognition, measurement and derecognition:
A financial liability is recognised on the statement of financial position when, and only when, the entity becomes a party
to the contractual provisions of the instrument and it is derecognised when the obligation specified in the contract is
discharged or cancelled or expires. The initial recognition of financial liability is at fair value normally represented by
the transaction price. The transaction price for financial liability not classified at fair value through profit or loss includes
the transaction costs that are directly attributable to the acquisition or issue of the financial liability. Transaction costs
incurred on the acquisition or issue of financial liability classified at fair value through profit or loss are expensed
immediately. The transactions are recorded at the trade date. Financial liabilities including bank and other borrowings
are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12
months after the end of the reporting year.
Subsequent measurement:
Subsequent measurement based on the classification of the financial liabilities in one of the following two categories
under FRS 39 is as follows:
1.
Liabilities at fair value through profit or loss: Liabilities are classified in this category when they are incurred
principally for the purpose of selling or repurchasing in the near term (trading liabilities) or are derivatives
(except for a derivative that is a designated and effective hedging instrument) or have been classified in this
category because the conditions are met to use the “fair value option” and it is used. Financial guarantee
contracts if significant are initially recognised at fair value and are subsequently measured at the greater of (a)
the amount measured in accordance with FRS 37 and (b) the amount initially recognised less, where appropriate,
cumulative amortisation recognised in accordance with FRS 18. All changes in fair value relating to liabilities at
fair value through profit or loss are charged to profit or loss as incurred.
2.
Other financial liabilities: All liabilities, which have not been classified in the previous category fall into this
residual category. These liabilities are carried at amortised cost using the effective interest method. Trade and
other payables and borrowings are usually classified in this category. Items classified within current trade and
other payables are not usually re-measured, as the obligation is usually known with a high degree of certainty
and settlement is short-term.
Classification of Equity and Liabilities
A financial instrument is classified as a liability or as equity in accordance with the substance of the contractual
arrangement on initial recognition. Equity instruments are contracts that give a residual interest in the net assets of the
reporting entity. Where the financial instrument does not give rise to a contractual obligation on the part of the issuer to
make payment in cash or kind under conditions that are potentially unfavourable, it is classified as an equity instrument.
Ordinary shares are classified as equity. Equity instruments are recognised at the amount of proceeds received net of
incremental costs directly attributable to the transaction. Dividends on equity are recognised as liabilities when they
are declared. Interim dividends are recognised when declared by the directors.
