fair value through net result on the basis that the financial assets form part of a group of financial assets that are managed based on their fair values and have their performance evaluated in accordance with documented risk management and investment strategies. Financial instruments at fair value through net result are initially measured at fair value; attributable transaction costs are expensed as incurred. Subsequently, any changes in fair value are recognised in the net result as other economic flows unless the changes in fair value relate to changes in DJPR’s own credit risk. In this case, the portion of the change attributable to changes in DJPR’s own credit risk is recognised in other comprehensive income with no subsequent recycling to net result when the financial liability is derecognised. DJPR recognises some debt securities that are held for trading in this category and designated certain debt securities as fair value through net result in this category. Financial liabilities at amortised cost are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest bearing liability, using the effective interest rate method. DJPR recognises the following liabilities in this category: payables (excluding statutory payables); and • borrowings (including finance lease liabilities). • Financial instrument liabilities measured at amortised cost include DJPR's leased motor vehicles, contractual payables, deposits held and advances received, and interest-bearing arrangements other than those designated at fair value through profit or loss. Derivative financial financial instruments are classified as held for trading financial assets and liabilities. They are initially recognised at fair value on the date on which a derivative contract is entered into. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Any gains or losses arising from changes in the fair value of derivatives after initial recognition are recognised in the consolidated comprehensive operating statement as an ‘other economic flow’ included in the net result. Offsetting financial instruments: financial instruments: Financial instrument assets and liabilities are offset and the net amount presented in the consolidated balance sheet when, and only when, DJPR concerned has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Some master netting arrangements do not result in an offset of balance sheet assets and liabilities. Where DJPR does not have a legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events such as default, insolvency or bankruptcy, they are reported on a gross basis.

###### Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; or • DJPR retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without • material delay to a third party under a ‘pass through’ arrangement; or DJPR has transferred its rights to receive cash flows from the asset and either: •

- (a) has transferred substantially all the risks and rewards of the asset; or
- (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where DJPR has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of DJPR’s continuing involvement in the asset.

###### Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability 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 a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised as an other economic flow in the estimated consolidated comprehensive operating statement.

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DJPR Annual Report 2018–19