KENANGA ANNUAL REPORT 2017

3. ACCOUNTING POLICIES (CONT’D.) 3.4 Summary of significant accounting policies (cont’d.) (k) Financial liabilities (cont’d.) Financial liabilities, are recognised in the statements of financial position when, and only when, the Group and the Bank become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held-for-trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held-for-trading include derivative financial instruments entered into by the Group and the Bank that do not meet the hedge accounting criteria. The accounting policy for derivative financial instruments is disclosed in Note 3.4(o). (ii) Other financial liabilities The Group’s and the Bank’s other financial liabilities include deposits from customers, deposits and placements of banks and other financial institutions and balances due to clients and brokers. Deposits from customers, deposits and placements of banks and other financial institutions are initially recognised at placement values, which represent the fair value plus directly attributable transaction costs, and subsequently measured at amortised cost using the EIR. Balances due to clients and brokers represent amounts payable in respect of outstanding contracts entered into on behalf of these clients where settlements have yet to be made, which represent the initial fair value plus directly attributable transaction costs, and subsequently measured at amortised cost using the EIR. The credit terms for trade settlements are based on the agreements entered into between the Group and its clients and are in accordance with the Rules of Bursa Malaysia Securities Berhad (“Bursa Rules”). Other financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at cost using the EIR. Gains or losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss. (l) Property, plant and equipment and depreciation All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the Bank and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised in profit or loss during the financial period in which they are incurred. Annual Report 2017 31 December 2017 113 notes to the financial statements