LensCrafters 2013 Annual Report Download - page 105

receivables are initially measured at their fair value plus transaction costs. After initial recognition, loans and
receivables are measured at amortized cost, using the effective interest method.
(c) Financial assets available for sale
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category
or not classified in any of the other categories. They are included in non-current assets unless the investment matures or
management intends to dispose of it within 12 months of the end of the reporting period. Financial assets available for
sale are initially measured at their fair value plus transaction costs. After initial recognition, financial assets available
for sale are carried at fair value. Any changes in fair value are recognized in other comprehensive income. Dividend
income from financial assets held for sale is recognized in the consolidated statement of income as part of other income
when the Group’s right to receive payments is established.
A regular way purchase or sale of financial assets is recognized using the settlement date.
Financial assets are derecognized when the rights to receive cash flows from the investments have expired or
have been transferred and the Group has transferred substantially all risks and rewards of ownership.
The fair value of listed financial instruments is based on the quoted price on an active market. If the market for
a financial asset is not active (or if it refers to non-listed securities), the Group defines the fair value by utilizing
valuation techniques. These techniques include using recent arms-length market transactions between knowledgeable
willing parties, if available, reference to the current fair value of another instrument that is substantially the same,
discounted cash flows analysis, and pricing models based on observable market inputs, which are consistent with the
instruments under valuation.
The valuation techniques are primarily based on observable market data as opposed to internal sources of
information.
At each reporting date, the Group assesses whether there is objective evidence that a financial asset is
impaired. In the case of investments classified as financial assets held for sale, a prolonged or significant decline in the
fair value of the investment below its cost is also considered an indicator that the asset is impaired. If any such evidence
exists for an available-for-sale financial asset, the cumulative loss, measured as the difference between the cost of
acquisition and the current fair value, net any impairment loss previously recognized in the consolidated statement of
income, is removed from equity and recognized in the consolidated statement of income.
Any impairment loss recognized on an investment classified as an available-for-sale financial asset is not
reversed.
Derivative financial instruments
Derivative financial instruments are accounted for in accordance with IAS 39—Financial Instruments:
Recognition and Measurement.
At the date the derivative contract is entered into, derivative instruments are accounted for at their fair value
and, if they are not designated as hedging instruments, any changes in fair value after initial recognition are recognized
as components of net income for the year. If, on the other hand, derivative instruments meet the requirements for being
classified as hedging instruments, any subsequent changes in fair value are recognized according to the following
criteria, as illustrated below.
The Group designates certain derivatives as instruments for hedging specific risks associated with highly
probable transactions (cash flow hedges).
For each derivative financial instrument designated as a hedging instrument, the Group documents the
relationship between the hedging instrument and the hedged item, as well as the risk management objectives, the
hedging strategy and the methodology to measure the hedging effectiveness. The hedging effectiveness of the
instruments is assessed both at the hedge inception date and on an ongoing basis. A hedging instrument is considered
highly effective when both at the inception date and during the life of the instrument, any changes in fair value of the
derivative instrument offset the changes in fair value or cash flows attributable to the hedged items.
If the derivative instruments are eligible for hedge accounting, the following accounting criteria are applicable: