Annual Report 2020-2021, Northern Territory Legal Aid Commission
Tabled Paper 433
Tabled Papers for 14th Assembly 2020 -; Tabled Papers; ParliamentNT
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Legislative Assembly of the Northern Territory
0 6 5 n o rth e rn te rrito ry le g a l a id c o m m issio n a n n u a l re p o rt 2 0 2 0 /2 1 Instead, it is transferred to retained earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income enlarges or creates an accounting mismatch, then these gains or losses are taken to profit or loss rather than other comprehensive income. A financial liability cannot be reclassified. Financial asset Financial assets are subsequently measured at: amortised cost; fair value through other comprehensive income; or fair value through profit and loss on the basis of the two primary criteria, being: the contractual cash flow characteristics of the financial asset; and the business model for managing the financial assets. A financial asset is subsequently measured at amortised cost when it meets the following conditions: the financial asset is managed solely to collect contractual cash flows; and the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. A financial asset is subsequently measured at fair value through other comprehensive income when it meets the following conditions: the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; and the business model for managing the financial asset comprises both contractual cash flows collection and the selling of the financial asset. By default, all other financial assets that do not meet the conditions of amortised cost and the fair value through other comprehensive incomes measurement condition are subsequently measured at fair value through profit or loss. The Commission initially designates financial instruments as measured at fair value through profit or loss if: it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; it is in accordance with the documented risk management or investment strategy and information about the groupings was documented appropriately, so the performance of the financial liability that was part of a group of financial liabilities or financial assets can be managed and evaluated consistently on a fair value basis; and it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows otherwise required by the contract. The initial designation of the financial instruments to measure at fair value through profit and loss is a one time option on initial classification and is irrevocable until the financial asset is derecognised.
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