Page 117 - DUT Annual Report 2020

DURBAN UNIVERSITY OF TECHNOLOGY
BAN UNIVERSITY OF TECHNOLOGY
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020
1. ACCOUNTING POLICIES (continued) 1.12 Financial instruments (continued)
The University’s financial assets at amortised cost includes trade receivables and prepayments, student fees receivable, cash, and cash equivalents, which comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.
1.12.2.2 Financial assets at fair value through other comprehensive income (FVOCI)
Classification of financial assets at FVOCI comprises the following category:
Equity instruments which are not expected to be sold in the short to medium term, and which the University has irrevocably elected at initial recognition to recognise in this category. These are strategic investments and the University considers this classification to be more relevant.
Subsequent measurement
For assets measured at fair value, gains and losses will either be recorded in net surplus or deficit or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the University has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
Equity instruments
The University subsequently measures all equity instruments at fair value. The changes in fair value are recognised in other comprehensive income, and transferred to the fair value reserve. There is no subsequent reclassification of fair value gains and losses to net surplus or deficit. Impairment losses on equity instruments measured at FVOCI are not reported separately from other changes in fair value.
Debt instruments
Subsequent measurement of debt instruments depends on the University’s business model for managing the asset and the cash flow characteristics of the asset. Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses, which are recognised in net surplus or deficit. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to net surplus or deficit and recognised in other gains/ (losses). Interest income from these financial assets is included in finance income using the effective interest rate method.
Dividends on these investments is recognised in net surplus or deficit when the University’s right to receive payments is established. Dividends are included in the ‘investment income - dividends’ line item (note 16.1) in net surplus or deficit.
1.12.2.3 Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period. Specifically,
 for financial assets measured at amortised cost that are not part of a designated hedging relationship,
exchange differences are recognised in net surplus or deficit;
 for debt instruments measured at fair value through other comprehensive income that are not part
of a designated hedging relationship, exchange differences on the amortised cost of the debt
instrument are recognised in net surplus or deficit in the ‘other gains and losses’ line item;
 for equity instruments measured at FVOCI, exchange differences are recognised in other
comprehensive in the fair value reserve.
DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
 Foreign exchange gains and losses are presented in other gains/ (losses).
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