calculated on the basis of such cost, to reflect the already consumed or expired
service potential of the asset. In determining fair value less costs to sell, the price
of the assets in a binding agreement in an arm's length transaction, adjusted for
incremental costs that would be directly attributed to the disposal of the asset is
used. If there is no binding agreement, but the asset is traded on an active market,
fair value less cost to sell is the asset's market price less cost of disposal. If there
is no binding sale agreement or active market for an asset, the LGUs determine
fair value less cost to sell based on the best available information.
For each asset, an assessment is made at each reporting date as to whether there is
any indication that previously recognized impairment losses may no longer exist
or may have decreased. If such indication exists, the LGUs estimate the asset's
recoverable service amount. A previously recognized impairment loss is reversed
only if there has been a change in the assumptions used to determine the asset’s
recoverable service amount since the last impairment loss was recognized. The
reversal is limited so that the carrying amount of the asset does not exceed its
recoverable service amount, nor exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognized for
the asset in prior years. Such reversal is recognized in surplus or deficit.
3.7 Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are classified as financial assets at fair value through surplus or
deficit, loans and receivables, held-to-maturity investments or available-for-sale
financial assets, as appropriate. The LGUs determine the classification of its
financial assets at initial recognition.
Purchases or sales of financial assets that require delivery of assets within a time
frame established by regulation or convention in the marketplace (regular way
trades) are recognized on the trade date, i.e., the date that the LGU commit to
purchase or sell the asset.
The LGUs financial assets include: cash and short-term deposits; trade and other
receivables; loans and other receivables and quoted and unquoted financial
instruments.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification.
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