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5. Financial Instruments

2021

$

2020

$

5.1A. Categories of Financial Instruments

Financial assets at amortised cost

Cash and cash equivalents

2,516,827

2,112,733

Loans and other receivables

3,419,622

3,606,351

Total financial assets at amortised cost

5,936,449

5,719,084

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

13,183

23,413

Total financial liabilities measured at amortised cost

13,183

23,413

Accounting Policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the Fund classifies its financial assets in the following category:

  1. financial instruments 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 receive 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 included in this category need to meet two criteria:

  1. the financial asset is held in order to collect the contractual cash flows; and
  2. 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 for financial assets that are recognised at amortised cost.

Impairment of Financial Assets

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.

The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime credit losses.

A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.

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).

5.1B. Net Gains (Losses) on Financial Assets

2021

$

2020

$

Financial assets at amortised cost

Cash and cash equivalents

Interest revenue from investments

1.2B

5,488

8,578

Net gain from cash and cash equivalents

5,488

8,578

Loans and receivables

Loan administration fees

1.2A

65,060

81,000

Loan interest

1.2B

363,357

563,886

Loss on initial recognition of loans and receivable at fair value

1.1E

(305,952)

(506,592)

Net gain from loans and receivables

122,465

138,294

Net gains on financial assets at amortised cost

127,953

146,872