Page 120 - Annual Report 2016 EN

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receive cash flows from the asset or has assumed an obli- Financial liabilities
gation to pay the received cash flows in full without material Initial recognition and measurement
delay to a third party under a “pass-through” arrangement; Financial liabilities are classified, at initial recognition, as financial
and either (a) the QFC Regulatory Authority has transferred liabilities at fair value through profit or loss, loans and borrowings,
substantially all the risks and rewards of the asset, or (b) the payables or as derivatives designated as hedging instruments in
QFC Regulatory Authority has neither transferred nor retained an effective hedge, as appropriate. The QFC Regulatory Author-
substantially all the risks and rewards of the asset, but has trans- ity determines the classification of its financial liabilities at initial
ferred control of the asset.
recognition.
When the QFC Regulatory Authority has transferred its rights to All financial liabilities are recognised initially at fair value and, in
receive cash flows from an asset or has entered into a pass-through the case of loans and borrowings and payables, net of directly
arrangement, it evaluates if and to what extent it has retained attributable transaction costs.
the risks and rewards of ownership. When it has neither transferred
nor retained substantially all the risks and rewards of the asset, nor The QFC Regulatory Authority’s financial liabilities include trade
transferred control of the asset, the asset is recognised to the extent payables and accrued expenses.
of the QFC Regulatory Authority’s continuing involvement. In that Subsequent measurement
case, the QFC Regulatory Authority also recognises an associated
liability. The transferred asset and the associated liability are mea- The subsequent measurement of financial liabilities depends on
sured on a basis that reflects the rights and obligations that the their classification as described below:
QFC Regulatory Authority has retained. Continuing involvement Accounts payable and accruals
that takes the form of a guarantee over the transferred asset is Considering the short-term nature of these liabilities, accounts pay-
measured at the lower of the original carrying amount of the asset able and accruals are recognised for amounts to be paid in the
and the maximum amount of consideration that the QFC Regula- future for goods or services received without discounting, whether
tory Authority could be required to repay. billed by the supplier or not.
Impairment of financial assets Derecognition

The QFC Regulatory Authority assesses, at each reporting date, A financial liability is derecognised when the obligation under the
whether there is any objective evidence that a financial asset or a liability is discharged or cancelled or expires. When an existing
group of financial assets is impaired. An impairment exists if one or financial liability is replaced by another from the same lender on
more events that has occurred since the initial recognition of the substantially different terms, or the terms of an existing liability are
asset (an incurred “loss event”), has an impact on the estimated substantially modified, such an exchange or modification is treated
future cash flows of the financial asset or the group of financial as the derecognition of the original liability and the recognition of
assets that can be reliably estimated. Evidence of impairment a new liability. The difference in the respective carrying amounts is
may include indications that the debtors or a group of debtors is recognised in the statement of comprehensive income.
experiencing significant financial difficulty, default or delinquency
in interest or principal payments, the probability that they will enter Offsetting of financial instruments
bankruptcy or other financial reorganization and observable data Financial assets and financial liabilities are offset and the net
indicating that there is a measurable decrease in the estimated amount is reported in the consolidated statement of financial
future cash flows, such as changes in arrears or economic condi- position if there is a currently enforceable legal right to offset the
tions that correlate with defaults. recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities simultaneously.