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2.3 Financial assets and liabilities
Recognition and measurement
A fnancial asset or liability is recognised if the Company becomes party to the contractual provisions of the instrument.
Regular purchases and sales of fnancial assets and liabilities are recognised on the trade date, the date on which the
Company commits to purchase or sell the asset or liability. A fnancial asset or liability is recognised initially at its fair
value and in the case of a fnancial asset or liability measured at amortised cost includes transaction costs that are
directly attributable to the acquisition or issue of the instrument.
Financial assets and liabilities measured at amortised cost
Financial assets and liabilities measured at amortised cost are non-derivative fnancial assets and liabilities which meet
the following criteria:
a) held within a business model whose objective is to hold an instrument in order to collect contractual cash fows; and
b) the contractual terms of the instrument gives rise on specifed dates to cash fows that are solely payments of
principal and interest on the principal amount outstanding.
A gain or loss on a fnancial asset and liability that is measured at amortised cost and is not part of a hedging relationship
recognised in proft and loss when the instrument is derecognised, impaired or reclassifed and through the amortisation
process.
Trade and other receivables are classifed as fnancial assets measured at amortised cost. Trade and other payables and
debt instruments are classifed as fnancial liabilities measured at amortised cost.
Financial assets and liabilities measured at fair value through proft or loss
Financial assets and liabilities are measured at fair value unless measured at amortised cost. At initial recognition, an
entity may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value
of an investment in an equity instrument within the scope of this NZ IFRS that is not held for trading. If an entity makes this
election, it shall recognise in proft or loss dividends from that investment when the entity’s right to receive payment of
the dividend is established in accordance with NZ IAS 18 ‘Revenue’. An entity may also at initial recognition, designate an
instrument as measured at fair value through proft or loss if doing so eliminates or signifcantly reduces a measurement
or recognition inconsistency that would otherwise arise from measuring the instruments or recognising gains and losses
on them on different bases.
The fair values of quoted investments are based on current bid prices. If the market for a fnancial asset is not active
(and for unlisted securities), the Company establishes fair value by using valuation techniques. These include the use of
recent arm’s length transaction pricing models refned to refect the Company’s specifc circumstances.
A gain or loss on a fnancial asset or liability that is measured at fair value and is not part of a hedging relationship shall
be recognised in proft and loss unless the fnancial asset is an investment in an equity instrument and the entity has
made an irrevocable election to present gains and losses on that investment in other comprehensive income.
Financial assets are de-recognised when the rights to receive cash fows from the fnancial assets have expired or have
been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial liabilities
are de-recognised if the Group’s obligations specifed in the contract expire or are discharged or cancelled.
2.4 Revenue recognition
Revenue is comprised of the fair value for the sale of goods and services, net of goods and services tax (GST), rebates
and discounts. Revenue is recognised as follows:
(a) Financial assets are classifed as revenue on initial recognition; and
(b) Dividend income is recognised when the right to receive payment is established.
2.5 Current income tax
The Inland Revenue Department approved the Company as a Maaori Authority for the purposes of the Income Tax Act
1994. Accordingly, income tax is payable at a rate of 19.5%.
notes to the financial Statements continued