Report and Financial Statements for the Year Ended 31 July 2012

PRINCIPAL ACCOUNTING POLICIES (continued)
Financial assets
Financial assets are categorised as loans and receivables; available-for-sale financial assets, and held-to-maturity
investments. They are assigned by management to these different categories on initial recognition, depending on the
purpose for which they were acquired.
All financial assets are recognised when the group becomes a party to the contractual provisions of the instrument.
Financial assets are initially recognised at fair value plus transaction costs. There are no financial assets categorised as
at fair value through the income and expenditure account.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Trade debtors and current asset investments (cash deposits) are classified as loans and receivables.
Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest
method, less provision for impairment. Any change in their value through impairment or reversal of impairment is
recognised in the income and expenditure account.
Provision against trade debtors is made when there is objective evidence that the group will not be able to collect all
amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount and the present value of estimated future cash flows.
Available-for-sale financial assets include non-derivative financial assets that are either designated as such or do not
qualify for inclusion in any of the other categories of financial assets. All financial assets within this category are
measured subsequently at fair value, with changes in value recognised in reserves, through the consolidated statement
of total recognised gains and losses. Gains and losses arising from investments classified as available-for-sale are
recognised in the income and expenditure account when they are sold or when the investment is impaired.
An assessment for impairment is undertaken at each balance sheet date.
Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the group becomes a party
to the contractual provisions of the instrument. Financial liabilities categorised as at fair value through the income and
expenditure account are recorded initially at fair value, with transaction costs recognised in the income and expenditure
account. All other financial liabilities are recorded initially at fair value, net of transaction costs.
Financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges
recognised as a finance expense in the income and expenditure account. Finance charges, including premiums payable on
settlement or redemption and transaction costs, are charged to the income and expenditure account on an accruals basis
using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
Medway School of Pharmacy
The University has an agreement with the University of Kent with respect to the Medway School of Pharmacy, under
which revenue and costs are shared equally. In accordance with FRS9 this arrangement has been accounted for as a Joint
Arrangement that is Not an Entity (JANE), reflecting the University’s share of the assets, liabilities and results for the year
within the financial statements.
Financial Statements for the Year Ended 31 July 2012 31