Full annual report - African Bank - Investoreports

Notes to the group annual financial statements continued
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Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less
estimated costs to be incurred to sell the asset.
4.9 Inventories
Inventories, being assets held for sale in the ordinary course of business, are stated at the lower of cost and estimated
net realisable value. Cost is determined on the first-in first-out basis and includes all costs of purchase, costs of
conversion and other costs such as transportation and handling costs incurred in bringing the inventories to their
present location and condition, net of discount and rebates received. The cost of manufactured products includes
both direct expenditure and a proportion of production overheads based on the normal level of activity. Net
realisable value represents the estimated selling price in the ordinary course of business, less all estimated costs of
completion and the costs to be incurred in marketing, selling and distribution.
The amount of any write down of inventories to net realisable value and all losses of inventories are recognised as an
expense in the period in which the write down or loss occurs.
4.10 Financial instruments
A financial instrument is defined as a contract that gives rise to a financial asset in one entity and a financial liability
or equity instrument in another entity.
Financial instruments, as reflected on the statement of financial position, include all financial assets, financial
liabilities, derivative instruments and equity instruments held for investment, trading, hedging or liquidity purposes,
but exclude investments in subsidiaries, associated companies and joint ventures, employee benefit plans, investment
property, property and equipment, inventory, assets and liabilities of insurance operations, deferred taxation,
taxation payable, provisions, intangible assets and goodwill.
Financial instruments are accounted for under IAS 32 Financial Instruments: Presentation and IAS 39 Financial
Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures.
Financial assets are classified into the following categories:
– financial assets at fair value through profit or loss;
– held-to-maturity investments;
– loans and receivables; and
– available-for-sale financial assets.
Financial liabilities are classified into the following categories:
– financial liabilities at fair value through profit or loss; and
– financial liabilities at amortised cost.
The classification of financial assets and financial liabilities depends on the nature and purpose of the financial
instrument and is determined at the time of initial recognition.
4.10.1 Initial recognition
Financial instruments are recognised on the statement of financial position when the group becomes a party
to the contractual provisions of a financial instrument.
4.10.2 Initial measurement
All financial instruments are initially recognised at fair value plus transaction costs, except those carried at fair
value through profit or loss where transaction costs are recognised immediately through profit or loss.