trading if they are acquired for the purpose of selling or repurchasing in the near
term. Financial assets at fair value through surplus or deficit are carried in the
statement of financial position at fair value with changes in fair value
recognized in surplus or deficit.
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 Group’s financial liabilities include 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.
Derecognition
A financial liability is derecognized when the obligation under the liability is
discharged or cancelled or expires.
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