Appendix 1 - Financial Statements
Note 1: Summary of Significant Accounting Policies
1.11 Financial assets
PSR classifies its financial assets as loans and receivables.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Financial assets are recognised and derecognised upon ‘trade date’.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis except for financial assets ‘at fair value through profit or loss’.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. They are included in current assets. PSR considers that the carrying amounts of financial instruments reported in the balance sheet are a reasonable approximation of fair value.
PSR has no allowance for doubtful debts because all debts are deemed to be recoverable.
Supplier and other payables
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).