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Managing Uncertainties

Managing uncertainties

This section analyses how the AMFRTF manages financial risks within is operating environment

4.1: Financial Instruments

2019

2018

$

$

4.1A: Categories of Financial Instruments

Financial Assets

Cash and cash equivalents

2,291,306

2,185,983

Loans and receivables

3,532,460

3,464,259

Total financial assets

5,823,766

5,650,242

Financial Liabilities

Trade creditors and accruals

20,240

13,000

Total financial liabilities

20,240

13,000

Classification of Financial assets on the date of initial application of AASB 9.

Financial asset category

Cash and cash equivalents

Loans and receivables

Total financial assets

AASB 139 classification

Held-to-maturity

Held-to-maturity

AASB 9 new classification

Amortised Cost

Amortised Cost

AASB 139 carrying amount at 1 July 2018

2,185,983

3,464,259

5,650,242

AASB 9 carrying amount at 1 July 2018

2,185,983

3,464,259

5,650,242

There were no changes to the carrying amounts of financial assets on the initial application of AASB 9.

Accounting Policy

Financial Assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the AMFRTF classifies its financial assets in the following categories:
a) financial assets at fair value through profit or loss;
b) financial assets at fair value through other comprehensive income; and
c) financial assets measured at amortised cost.
The classification depends on both the entity's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.
Comparatives have not been restated on initial application.

Financial Assets at Amortised Cost
Financial assets are measured at amortised cost when the financial asset is held in order to collect the contractual cash flows and the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.

Effective Interest Method

Income is recognised on an effective interest rate basis except for financial assets at fair value through profit or loss.

4.1: Financial Instruments continued

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period. Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12‐month expected credit losses if risk has not increased.

Financial Liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial Liabilities at Amortised Cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.
Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

2019

2018

$

$

4.1B: Net Gains and Losses from Financial Assets

Loans and receivables

Bank interest revenue

52,718

48,128

Members contributions on loans

147,646

141,781

Loan interest revenue

432,389

408,610

Loss on initial recognition of loans on receivables

at fair value

(428,934)

(423,432)

Net gain on financial assets

203,819

175,087

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4.2: Contingent Assets and Liabilities

Accounting Policy

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent as asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

The AMFRTF has no contingencies in either the current or the immediately preceding reporting periods therefore a Schedule for such items has not been included in the financial statements.