NTUC Income AR 2017

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Insurance and other receivables Insurance and other receivables include outstanding premiums, trade receivables, accrued interest receivable from fixed deposits with banks and other receivables. These are recognised initially at fair value and subsequently measured at amortised cost less accumulated impairment losses. (q) Cash and cash equivalents Cash and cash equivalents comprise bank balances and fixed deposits held with banks which are readily convertible into known amounts of cash and are subject to an insignificant risk of change in value. (r) Financial liabilities Borrowings Borrowings within the scope of FRS 39 Financial Instruments: Recognition and Measurement are recognised when, and only when, the entity becomes a party to the contractual provisions of the instrument. The Group determines the classification of its borrowings at initial recognition. Borrowings are recognised initially at fair value less transaction costs that are directly attributable to the acquisition or issue of the borrowing. After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Gains or losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A borrowing is derecognised when the obligation under the borrowing is extinguished. When an existing borrowing is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as an extinguishment of the original borrowing and the recognition of a new borrowing. The difference between the carrying amount of a borrowing extinguished shall be recognised in profit or loss. Insurance and other payables Insurance and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. (s) Share capital and treasury shares All paid-up shares are Common Shares and are classified as equity. Although they do not qualify as equity based on the presentation requirements of FRS 32 Financial Instruments: Presentation , the Co-operative has classified the shares as equity as there is a minimum paid-up capital requirement under the Insurance (Valuation and Capital) Regulations 2004. All shareholders are entitled to redeem their shares at the par value of $10 each or the net asset value (NAV) based on the last audited financial statements, whichever is lower. NAV is computed in accordance with the Co-operative Societies Act. Dividends on Common Shares are recognised in the statement of changes in equity in the year in which they are declared and approved for payment. The consideration payable for the purchase by the Group of its own shares is treated as treasury shares at the reporting date, and shown as a deduction from shareholders’ fund in the statement of changes in equity. (t) Dividends to the Co-operative’s shareholders Dividends to the Co-operative’s shareholders are recognised when the dividends are approved for payment. ANNUAL REPORT 2017 EVERY DAY MADE DIFFERENT 61