Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 are classified as financial
liabilities at fair value through surplus or deficit or loans and borrowings, as
appropriate. The LGU determines the classification of its financial liabilities at
initial recognition.
All financial liabilities are recognized initially at fair value and, in the case of
loans and borrowings.
The LGU groups financial liabilities including trade and other payables, loans
and borrowings.
Subsequent measurement
The measurement of financial liabilities depends on their classification.
Financial liabilities at fair value through surplus or deficit
Financial liabilities at fair value through surplus or deficit include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through surplus or deficit.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently
measured at amortized cost using the effective interest method. Gains and losses
are recognized in surplus or deficit when the liabilities are derecognized as well
as through the effective interest method amortization process.
Amortized cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective interest
rate.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in
the consolidated statement of financial position if, there is a currently
enforceable legal right to offset the recognized amounts and there is an intention
to settle on a net basis, or to realize the assets and settle the liabilities
simultaneously.
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