IOOF  | Annual Report 2012 (d) Financial instruments (i) Non-derivative financial assets (vi) Transactions eliminated on consolidation (b) Foreign currency transactions Financial assets at fair value through profit or loss Loans and receivables (c) Cash and cash equivalents page 63 Loans and receivables are non-derivative financial assets with  fixed or determinable payments that are not quoted on an  active market. They arise when the Group provides money,  assets, or services directly to a debtor with no intention of  selling the receivable. Subsequent to initial recognition, loans  and receivables are measured at amortised cost using the  effective interest method, less any impairment losses (see note  3(h)(i)). Cash and cash equivalents includes cash on hand, deposits  held at call with financial institutions, other short-term, highly  liquid investments with original maturities of three months or  less that are readily convertible to known amounts of cash and  which are subject to an insignificant risk of changes in value  and bank overdrafts. Non-monetary assets and liabilities denominated in foreign  currencies that are measured at fair value are retranslated  to the functional currency at the exchange rate at the date  the fair value was determined. Non-monetary items in a  foreign currency that are measured in terms of historical  cost are translated using the exchange rate at the date of  the transaction. Foreign currency differences arising on  the retranslation are recognised in profit or loss, except  for differences arising on the retranslation of available-for- sale equity instruments, which are recognised in other  comprehensive income. A financial asset is classified as at fair value through profit  or loss if it is classified as held for trading or is designated as  such upon initial recognition. Financial assets are designated  at fair value through profit or loss if the Group manages such  investments and makes purchase and sale decisions based on  their fair value in accordance with the Group’s documented risk  management or investment strategy. Upon initial recognition  attributable transaction costs are recognised in profit or loss  when incurred. Financial assets at fair value through profit  or loss are measured at fair value, and changes therein are  recognised in profit or loss. Transactions in foreign currencies are translated to the  respective functional currencies of the Group entities at  exchange rates at the dates of the transactions. Monetary  assets and liabilities denominated in foreign currencies at the  reporting date are retranslated to the functional currency at  the exchange rate at that date. The foreign currency gain or  loss on monetary items is the difference between amortised  cost in the functional currency at the beginning of the period,  adjusted for effective interest and payments during the period,  and the amortised cost in foreign currency translated at the  exchange rate at the end of the year. Financial assets and liabilities are offset and the net amount  presented in the statement of financial position, when and  only when, the Group 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. The group has the following non-derivative financial assets: The Group derecognises a financial asset when the contractual  rights to the cash flows from the asset expire, or it transfers the  rights to receive the contractual cash flows on the financial  asset in a transaction in which substantially all the risks and  rewards of ownership of the financial asset are transferred. Any  interest in transferred financial assets that is created or retained  by the Group is recognised as a separate asset or liability. Intra-group balances and transactions, and any unrealised  income and expenses arising from intra-group transactions, are  eliminated in preparing the consolidated financial statements.  Unrealised gains arising from transactions with equity  accounted investees are eliminated against the investment to  the extent of the Group’s interest in the investee. Unrealised  losses are eliminated in the same way as unrealised gains, but  only to the extent that there is no evidence of impairment. The Group initially recognises loans and receivables and  deposits on the date that they are originated. All other financial  assets (including assets designated at fair value through  profit or loss) are recognised initially on the date at which the  Group becomes a party to the contractual provisions of the  instrument. interest, including any long-term investments, is reduced to  nil, and the recognition of further losses is discontinued except  to the extent that the Group has an obligation or has made  payments on behalf of the investee. •  financial assets at fair value through profit or loss; •  loans and receivables; and •  available-for-sale financial assets.