- 12 - 3.20 Fair value measurement for disclosure purpose The Group regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Group assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of TFRS 13, including the level in the fair value hierarchy. When measuring the fair value of an asset or a liability, Group uses market observable data as the first priority. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques for fair value measurement as follows: - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. - Level 2 inputs are inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. - Level 3 inputs are unobservable inputs for the asset or liability. Fair value estimation of derivatives for disclosure information in the financial statements The fair value of publicly traded derivatives is based on quoted market prices at the financial position date (Level 1). The fair value of forward foreign exchange contracts and the interest rate swap contracts is determined by the market rate of each agreement which is calculated by financial institutions dealing with the Group at the financial position date. The fair values of commodity derivatives are calculated by the offering selling and buying price quoted by the financial institutions of the Group at the financial position date. 3.21 Accounting for financial instruments The Group shall recognise a financial asset or a financial liability in its statement of financial position only when the Group becomes party to the contractual provisions of the instrument. Regular way of purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised only when the rights to receive cash flows from the financial assets have expired or when the Group has transferred the financial assets which transferred substantially all the risks and rewards of ownership of the financial assets. Recognition, Measurement and Classification of financial assets At initial recognition, the Group measures a financial asset as follows: - A financial asset measured at amortised cost and a financial asset measured at fair value through other comprehensive income are measured at theirs fair value, plus or less transaction costs that are directly attributable to the acquisition or issuance of the financial assets. - A financial asset measured at fair value through profit or loss is measured at its fair value. Transaction costs are expensed in profit or loss. Subsequent measurement of financial assets depends on the Group’s business model for managing the financial asset and the cash flow characteristics of the financial assets. There are three measurement categories into which the Group classifies its financial assets: - Amortised cost - A financial asset will be measured at amortised cost when the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows. In addition, the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and impairment losses are presented in profit or loss. 314 IRPC PUBLIC COMPANY LIMITED 56-1 ONE REPORT 2021
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