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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

2020

2019

$

$

4.1A: Categories of Financial Instruments

Financial Assets at amortised cost

Cash and cash equivalents

2,946,067

2,291,306

Loans and receivables

3,148,654

3,532,460

Total financial assets at amortised cost

6,094,721

5,823,766

Financial Liabilities at amortised cost

Trade creditors and accruals

20,240

20,240

Total financial liabilities at amortised cost

20,240

20,240

Accounting Policy

Financial Assets

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.

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.

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.

4.1: Financial Instruments continued

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).

2020

2019

$

$

4.1B: Net Gains and Losses from Financial Assets

Loans and receivables

Bank interest revenue

39,154

52,718

Members contributions on loans

126,195

147,646

Loan interest revenue

447,502

432,389

Loss on initial recognition of loans on receivables

at fair value

-336,060

-428,934

Net gain on financial assets

276,791

203,819

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.