SIGA_Annual_Report_2015 - page 64

Classification and measurement (continued)
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.
SIGA derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive
the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial
asset are transferred. Any interest in transferred financial assets that is created or retained by SIGA is recognized as a separate asset or
liability. SIGA derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.
Derivative financial instruments
SIGA uses interest rate swap derivatives to manage its exposure to interest rate risk. Derivatives are initially recognized at fair value at
the date that the derivative contract is entered into and subsequently measured at fair value with changes in fair value recognized through
comprehensive income immediately.
Embedded derivatives
Derivatives may be embedded in other host instruments and are treated as separate derivatives when their economic characteristics and
risks are not clearly and closely related to those of the host instrument, when the embedded derivative has the same terms as those of
a stand-alone derivative, and the combined contract is not held-for-trading or designated at fair value. These embedded derivatives are
measured at fair value with subsequent changes recognized in the statement of comprehensive income.
As of March 31, 2015, SIGA had no contracts (March 31, 2014 – none) with embedded derivatives that are required to be .
valued separately.
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