3. Significant accounting policies (continued):
(b) Financial instruments (continued):
Financial instruments are recognized initially at amortized cost plus any directly attributable transaction costs.
Subsequent to initial recognition, financial instruments classified as fair value through income and loss are measured at fair value.
The Commission does not use derivative instruments.
The Commission derecognizes 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 in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred.
The Commission derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.
(c) Fair value:
Fair values are categorized into different levels in a fair value hierarchy based on inputs used in the valuation techniques as follows:
Level 1: unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly; and
Level 3: inputs for assets and liabilities that are based on observable market value.
(d) Inventory:
Inventory is measured at the lower of cost and net realizable value. The cost of inventory is determined on a weighted average basis and includes expenditures incurred in acquiring the material and supplies and other costs incurred in bringing them to their existing location and condition.