IREIT Global.
annual report 2014
For the reporting period from 1 November 2013 (date of constitution) to 31 December 2014
Notes to the
Financial Statements
2.
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
(e) Financial instruments
(Continued)
Borrowing
Borrowing is initially recognised at fair value (net of transaction costs incurred) and
subsequently carried at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is taken to expenses over the period of
borrowing using the effective interest rate method.
Borrowing is presented as a current liability unless the Group has an unconditional right to
defer settlement for at least 12 months after the end of the reporting period, in which case,
they are presented as non-current liabilities.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations
are discharged, cancelled or they expire.
Derivative financial instruments
The Group uses derivative financial instruments (primarily foreign exchange forward
contracts) to economically hedge its significant future transactions and cash flows in the
management of its exchange rate exposures. The Group does not use any financial derivative
instruments to manage its interest rates exposure. The Group does not use derivative
financial instruments for speculative purposes.
Derivative financial instruments are initially measured at fair value on the trade date, and
are remeasured to fair value at the end of each reporting period. All changes in fair value
are taken to profit or loss.
(f) Fair value estimation of financial assets and liabilities
The fair values of financial instruments traded in an active market (such as exchange traded
or over the counter derivatives) are based on quoted market prices prevailing on reporting
date.
The fair values of financial instruments that are not traded in an active market are determined
by using valuation techniques. IREIT uses a variety of methods and makes assumptions that
are based on market conditions existing at the reporting date. Where appropriate, quoted
market prices or dealer quotes for similar financial instruments are used.
The fair values of forward currency swaps are calculated based on estimated future cash
flows discounted at actively quoted currency rates.
