Huawei 2014 Annual Report Download - page 74

72 Huawei Investment & Holding Co., Ltd. 2014 Annual Report
and earnings not guaranteed are classified as
available-for-sale financial assets.
From time to time, the Group transfers
its trade receivables to banks or financial
institutions; the bank or the financial
institution fully bears the collection risk
without the right to receive payments from
the Group in the event a loss occurs due
to the non-collectibility of the receivables
transferred. The Group's customers make
payments of the receivables transferred
directly to the bank or the financial
institution. In such case, trade receivables
transferred are derecognised from the
consolidated statement of financial position.
The excess of the carrying amount of trade
receivables over cash received from the banks
or financial institutions is included in "other
(expenses)/income, net" in the consolidated
statement of profit or loss.
■ Available-for-sale financial assets
Available-for-sale financial assets are
non-derivative financial assets that are not
classified in any of the above categories of
financial assets. Available-for-sale financial
assets are recognised initially at fair value plus
any directly attributable transaction costs. At
the end of each reporting period the fair value
is remeasured, with any resultant gain or loss
being recognised in other comprehensive
income and accumulated separately in equity
in the fair value reserve. As an exception to
this, available-for-sale financial assets that do
not have a quoted price in an active market
for an identical instrument and whose fair
value cannot otherwise be reliably measured
are recognised in the consolidated statement
of financial position at cost less impairment
losses (see note 1(l)). Dividend income is
recognised in profit or loss in accordance
with the policy set out in note 1(u) and,
where these investments are interest-bearing,
interest calculated using the effective interest
method is recognised in profit or loss in
accordance with the policy set out in note
1(u).
When these assets are derecognised or
impaired (see note 1(l)), the cumulative gain
or loss is reclassified from equity to profit
or loss.
■ Interest-bearing loans and borrowings
Interest-bearing loans and borrowings
are recognised initially at fair value less
attributable transaction costs. Subsequent
to initial recognition, interest-bearing loans
and borrowings are stated at amortised cost
with any difference between the amount
initially recognised and redemption value
being recognised in profit or loss over the
period of the loans and borrowings, together
with any interest and fees payable, using the
effective interest method.
■ Other financial liabilities
Trade and other payables are initially
recognised at fair value and subsequently
stated at amortised cost unless the effect of
discounting would be immaterial, in which
case they are stated at cost.
(o) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank
and on hand, demand deposits with banks and
other financial institutions, and short-term, highly
liquid investments that are readily convertible
into known amounts of cash and which are
subject to an insignificant risk of changes in