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Notes to the Consolidated Financial Statements

For the year ended 31 December 2010

3. Significant accounting policies (continued)

Financial instruments (continued)

Financial assets (continued) Financial asset carried at fair value through profit or loss

Financial assets classified as at FVTPL include financial assets held-for-trading and those designated as at FVTPL on initial recognition.

A financial asset is classified as held-for-trading if:

  • it has been acquired principally for the purpose of selling it in the near future; or

  • it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual

pattern of short-term profit-taking; or

  • it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held-for-trading may be designated as at FVTPL upon initial recognition if:

  • such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

  • the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Groups documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

  • it forms part of a contract containing one or more embedded derivatives and HKAS 39 permits the entire combined

contract (asset or liability) to be designated as at FVTPL.

Financial assets at FVTPL are measured at fair value, with changes in fair value arising from remeasurement recognised directly in profit or loss in the period in which they arise. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including straight debt receivable in investment in convertible bonds, notes receivable, amounts due from associates, debtors, restricted cash and bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment of financial assets below).

Great Eagle Holdings Limited

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