SANDYPORT HOMEOWNERS ASSOCIATION LIMITED

NOTES TO THE AUDITED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2022

(Expressed in Bahamian Dollars)

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Financial instruments

i. Recognition and derecognition

Financial assets and financial liabilities are recognized when the Homeowners Association becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.

ii. Classification and initial measurement of financial assets

All financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

• amortized cost;

• fair value through profit or loss (FVTPL); and

• fair value through other comprehensive income (FVOCI)

The classification is determined by both:

• the entity’s business model for managing the financial asset; and

• contractual cash flow characteristics of the financial asset.

All income and expenses relating to financial assets that are recognized in the statement of profit or loss and other comprehensive income are presented within revenue and expenses.