Minerva Equity Limited - 31 March 2019 Final 19.08.2019 - Flipbook - Page 36
Minerva Equity Limited (formerly DMWSL 881 Limited)
Notes to the financial statements
for the period ended 31 March 2019 (continued)
3 Summary of significant accounting policies (continued)
Provisions and contingencies
Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of
a past event for which it is probable that an outflow of resources will be required to settle the
obligation and the amount can be reliably estimated. If the effect is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the
liability. The increase in the provision due to passage of time is recognised as a finance cost.
Contingencies
Contingent liabilities arising as a result of past events are not recognised when (i) it is not probable
that there will be an outflow of resources or that the amount cannot be reliably measured at the
reporting date or (ii) the existence will be confirmed by the occurrence or non-occurrence of
uncertain future events not wholly within the Company’s control. Contingent liabilities are disclosed in
the financial statements unless the probability of an outflow of resources is remote. Contingent
assets are not recognised. Contingent assets are disclosed in the financial statements when an
inflow of economic benefits is probable.
Financial instruments
The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial
instruments.
Financial assets
Basic financial assets, including trade and other receivables, cash and bank balances and
investments in commercial paper, are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the transaction is measured at the present
value of the future receipts discounted at a market rate of interest.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period financial assets measured at amortised cost are assessed for
objective evidence of impairment. If an asset is impaired the impairment loss is the difference
between the carrying amount and the present value of the estimated cash flows discounted at the
asset’s original effective interest rate. The impairment loss is recognised in the profit and loss
account.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was
recognised the impairment is reversed. The reversal is such that the current carrying amount does
not exceed what the carrying amount would have been had the impairment not previously been
recognised. The impairment reversal is recognised in the profit and loss account.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset
expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are
transferred to another party or (c) control of the asset has been transferred to another party who has
the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional
restrictions.
Financial liabilities
Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group
companies and preference shares, are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the debt instrument is measured at the
present value of the future receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate
method.
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