38 annual report 2012  kAThMANdu 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. Bank overdrafts are shown within  borrowings in current liabilities on the balance sheet. Financial assets at fair value through profit or loss are financial  assets held for trading. a financial asset is classified in this  category if acquired principally for the purpose of selling in the  short-term. derivatives are also categorised as held for trading  unless they are designated as hedges. assets in this category  are classified as current assets. trade receivables are recognised initially at fair value and  subsequently measured at amortised cost, less provision for  doubtful debts. the collectability of trade receivables is reviewed on an  on-going basis. debts, which are known to be uncollectible,  are written off. a provision for doubtful receivables is  established when there is objective evidence that the  Group will not be able to collect all amounts due according  to the original terms of receivables. Significant financial  difficulties of the debtor, probability that the debtor will  enter bankruptcy or financial reorganisation, and default or  delinquency in payments are considered indicators that the  trade receivable is impaired. the amount of the provision is  the difference between the asset’s carrying amount and the  present value of estimated future cash flows, discounted  at the effective interest rate. the amount of the provision is  recognised in the income statement. Financial assets carried at fair value through profit or loss  are initially recognised at fair value, and transaction costs  are expensed in the income statement. Financial assets are  derecognised when the rights to receive cash flows from the  investments have expired or have been transferred and the  Group has transferred substantially all risks and rewards of  ownership. loans and receivables are carried at amortised  cost using the effective interest method.  Gains or losses arising from changes in the fair value of  ‘financial assets at fair value through profit or loss’ are  presented in the income statement, except for foreign  exchange movements on monetary assets, which are  recognised in the income statement within ‘finance costs  – net’. dividend income from financial assets at fair value  through profit or loss is recognised in the income statement  as part of other income when the Group’s right to receive  payments is established. the Group assesses at each balance sheet date whether  there is objective evidence that a financial asset or a group of  financial assets is impaired.  Inventories are stated at the lower of cost and net realisable  value. Cost is determined on a weighted average cost method  and includes expenditure incurred in acquiring the inventories  and bringing them to their existing location and condition. net  realisable value is the estimated selling price in the ordinary  course of business, less applicable variable selling expenses. derivatives are initially recognised at fair value on the date a  derivative contract is entered into and are subsequently re- measured to their fair value. the method of recognising the  resulting gain or loss depends on whether the derivative is  designated as a hedging instrument, and if so, the nature of the  item being hedged. the Group designates certain derivatives  as either; (1) hedges of the fair value of recognised assets or  liabilities or a firm commitment (fair value hedge); or (2) hedges  of highly probable forecast transactions (cash flow hedges). the Group classifies its investments in the following  categories: loans and receivables, and financial assets at  fair value through profit or loss. the classification depends  on the purpose for which the investments were acquired.  Management determines the classification of its investments  at the initial recognition and re-evaluates this designation at  every reporting date.  the Group documents at the inception of the transaction  the relationship between hedging instruments and hedged  items, as well as its risk management objective and strategy  for undertaking various hedge transactions. the Group also  documents its assessment, both at hedge inception and on  an on-going basis, of whether the derivatives that are used in  hedging transactions have been and will continue to be highly  effective in offsetting changes in fair values or cash flows of  hedged items. loans and receivables are non-derivative financial assets with  fixed or determinable payments that are not quoted in an active  market. they arise when the Group provides money, goods  or services directly to a debtor with no intention of selling the  receivable. they are included in current assets, except for those  with maturities greater than 12 months after the balance sheet  date which are classified as non-current assets. (L) INVENTORIES (M) INVESTMENTS ANd OThER FINANCIAL ASSETS (N) dERIVATIVES (i) Loans and receivables (k) TRAdE RECEIVABLES (ii) Financial assets at fair value through  profit or loss