New Zealand Gazette – 2006 – No. 170

Page 4921

✨ Financial Accounting Policies



12 DECEMBER 2006 NEW ZEALAND GAZETTE, No. 170 4921

Subsequent to initial recognition, investments in subsidiaries are measured at cost in accordance with NZ IAS-27. Other financial assets are classified into one of four categories; financial assets at fair value through the profit or loss, held to maturity investments, available for sale financial assets or loan and receivables. At balance date the Company had the following classes of financial assets:

Loans and receivables

Trade receivables and other receivables are recorded at amortised cost less impairment.

g) Financial liabilities

Financial liabilities are recognised when the entity became party to the contractual provisions of the instrument.

h) Term Debt

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. Subsequent to initial recognition, loans and borrowings are carried at amortised cost. Borrowing costs are recognised as an expense when incurred, except to the extent that they are capitalised in accordance with e) above.

All interest bearing loans and borrowings are measured at amortised cost using the effective interest rate method which allocates the cost through the expected life of the borrowing. Amortised cost is calculated taking account of issue costs, and any discounts or premiums on draw down.

After initial recognition for those interest-bearing loans and borrowings where fair value hedge accounting is applied, the loan balance is adjusted for the change in the hedge risk only. The Company policy is to hedge the interest/foreign currency risk associated with term debt with financial instruments on matched terms.

Borrowings are classified as current liabilities (either advances and deposits or current portion of term debt) unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

i) Trade and other payables

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services. Subsequent to initial recognition, trade payables and other accounts payable are recorded at amortised cost. Given the nature of these liabilities amortised cost equals their notional principal.

j) Derivative Financial Instruments

Financial derivatives are initially recognised in the balance sheet at fair value on the date a derivative contract is entered into and are subsequently measured at their fair value on each balance sheet date, though the method of recognising the resulting gains and losses is dependent on whether hedge accounting is applied. When derivative contracts are entered into, the group designates them as either;

  • Hedges of the fair value of recognised assets or liabilities (fair value hedge); or
  • Hedges of forecast transactions or firm commitments (cash flow hedge) which hedge exposures to variability in cash flows; or
  • Hedges of net investments in foreign entities; or
  • Other derivative financial instruments not meeting hedge accounting criteria.


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Online Sources for this page:

VUW Te Waharoa — PDF NZ Gazette 2006, No 170


Gazette.govt.nz — PDF NZ Gazette 2006, No 170




✨ LLM interpretation of page content

🏭 Statement of Accounting Policies for Powerco Limited (continued from previous page)

🏭 Trade, Customs & Industry
Accounting Policies, Financial Statements, Investments, Financial Assets, Financial Liabilities, Loans and Receivables, Term Debt, Trade Payables, Derivative Financial Instruments