Page 48 - SIGA Annual Report 2013

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Saskatchewan Indian Gaming Authority Inc.
Notes to the Financial Statements
year ended March 31, 2013
Classification and measurement (continued)
A financial asset is classified as held-for-trading if:
It has been acquired principally for the purpose of selling it in the near term; or
On initial recognition it is part of a portfolio of identified financial instruments that SIGA manages together and has a recent actual
pattern of short-term profit-taking; or
It is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held-for-trading may be designated as FVTPL upon initial recognition if:
Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance
is evaluated on a fair value basis, in accordance with SIGA’s documented risk management or investment strategy, and information
about the grouping is provided internally on that basis; or
It forms part of a contract containing one or more embedded derivatives, and IAS 39,
Financial Instruments: Recognition and
permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial instruments classified as FVTPL are subsequently measured at fair value, with changes in fair value recognized in comprehensive
income. The net gain or loss recognized in comprehensive income incorporates any dividend or interest earned on the financial asset. Fair
value is determined in the manner described in Note 20.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market that
SIGA does not intend to sell immediately or in the near term. Loans and receivables are subsequently measured at amortized cost using
the effective interest method, less any impairment. Interest income, calculated using the effective interest rate method, is recognized in
comprehensive income.
Other financial liabilities include financial liabilities that have not been classified as FVTPL. Other financial liabilities are subsequently
measured at amortized cost using the effective interest method. Finance costs, calculated using the effective interest rate method, are
recognized in comprehensive income.
Financial assets and liabilities are offset and the net amount reported on the statement of financial position when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the
liability simultaneously.
Transaction costs
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial
liability. Transaction costs include fees and commissions paid to advisors, brokers and dealers. Transaction costs do not include debt
premiums or discounts or financing costs. Transaction costs are included in the initial carrying amount of financial instruments except
for financial instruments classified as FVTPL, in which case they are expensed as incurred. SIGA uses trade date accounting for regular
way contracts when recording financial asset transactions.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a financial asset or financial liability and of allocating
interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash receipts or payments (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the financial instrument, or when appropriate, a shorter period to the net
carrying amount of the financial asset or financial liability on initial recognition.