Page 86 - Annual Report

HONG KONG ACADEMY OF MEDICINE
香 港 醫 學 專 科 學 院
香港醫學專科學院
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2. BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

h) Other financial assets

Investments other than equity investments

Non-equity investments held by the Academy are classified as fair value through profit or loss
(FVTPL) when the contractual cash flows of the investment do not represent solely payments of
principal and interest. Changes in the fair value of the investment (including interest) are
recognised in profit or loss.

Equity investments

An investment in equity securities is classified as financial assets at FVTPL unless the equity
investment is not held for trading purposes and on initial recognition of the investment the
Academy makes an irrevocable election to designate the investment at fair value through other
comprehensive income (FVTOCI) (non-recycling) such that subsequent changes in fair value
are recognised in other comprehensive income. Such elections are made on an
instrument-by-instrument basis, but may only be made if the investment meets the definition of
equity from the issuer’s perspective. Where such an election is made, the amount accumulated
in other comprehensive income remains in the fair value reserve (non-recycling) until the
investment is disposed of. At the time of disposal, the attributable amount accumulated in the
fair value reserve (non-recycling) is transferred to general fund. It is not recycled through profit
or loss.

Dividends from an investment in equity securities, irrespective of whether classified as at FVTPL
or FVTOCI, are recognised in profit or loss as other income in accordance with the policy set out
in note 2(n).

i) Receivables

Receivables are initially recognised at fair value and thereafter stated at amortised cost using
the effective interest method, less allowance for impairment of doubtful debts (see note 2(g)(i)),
except where the receivables are interest-free loans made to related parties without any fixed
repayment terms or the effect of discounting would be immaterial. In such cases, the
receivables are stated at cost less allowance for impairment of doubtful debts.

Receivables are stated at amoritised cost using the effective interest method less allowance for
credit losses (see note 2(g)).

j) Payables

Payables are initially recognised at fair value and thereafter stated at amortised cost unless the
effect of discounting would be immaterial, in which case they are stated at cost.

k) 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 value, having been within three months of maturity at a acquisition.

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84 HKAM Annual Report 2024