Huawei 2014 Annual Report Download - page 73

71Consolidated Financial Statements Summary and Notes
recognised. The amount of any write-down of
inventories to net realisable value and all losses
of inventories are recognised as an expense in
the period the write-down or loss occurs. The
amount of any reversal of any write-down of
inventories is recognised as a reduction in the
amount of inventories recognised as an expense
in the period in which the reversal occurs.
(n) Financial instruments
Financial assets of the Group comprise financial
assets at fair value through profit or loss, loans
and receivables and available-for-sale financial
assets.
Financial liabilities of the Group comprise
interest-bearing loans and borrowings, and other
financial liabilities.
i) Recognition and derecognition
Financial assets and financial liabilities are
recognised in the consolidated statement of
financial position when the Group becomes
a party to the contractual provisions of the
instrument. All financial assets are initially
recognised at fair value, which is usually the
transaction price.
The Group derecognises 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 in a transaction in
which substantially all of the risks and rewards of
ownership of the financial asset are transferred,
or it neither transfers nor retains substantially
all of the risks and rewards of ownership and
does not retain control over the transferred
asset. Any interest in such derecognised financial
assets that is created or retained by the Group
is recognised as a separate asset or liability. The
Group derecognises a financial liability when its
contractual obligations are discharged, cancelled,
or expire.
Financial assets and financial liabilities are
offset and the net amount presented in the
consolidated statement of financial position
when, and only when, the Group currently has a
legally enforceable right to set off the recognised
amounts and intends either to settle them on a
net basis or to realise the asset and settle the
liability simultaneously.
ii) Measurement
■ Financial assets at fair value through profit or
loss
A financial asset is classified as at fair value
through profit or loss if it is classified as
held-for-trading or is designated as such
on initial recognition. Directly attributable
transaction costs are recognised in profit or
loss as incurred. At the end of each reporting
period the fair value is remeasured, with any
resultant gain or loss being recognised in
profit or loss. The net gain or loss recognised
in profit or loss does not include any dividends
or interest earned on these investments as
these are recognised in accordance with the
policies set out in note 1(u).
■ Loans and receivables
Loans and receivables are initially recognised
at fair value and thereafter stated at
amortised cost less allowance for impairment
of doubtful debts (see note 1(l)), except
where the receivables are interest-free loans
made to related parties without any fixed
repayment terms or the effect of discounting
would be immaterial. In such cases, the
receivables are stated at cost less allowance
for impairment of doubtful debts.
The Group purchases wealth management
products from commercial banks with
maturity less than one year. Wealth
management products with guaranteed
principals and earnings are classified as loans
and receivables; while those with principals