ArcelorMittal South Africa 2007 Annual Report Page 86 Notes to the group and company annual financial statements continued for the year ended 31 December 2007 a static growth factor in perpetuity. Cash flows are segmented into ZAR- and USD-denominated elements that are discounted using a ZAR- and USD pre-tax weighted average cost of capital respectively in order to derive a value- in-use for comparison against net carrying amount of tangible and intangible assets. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. 3.17 Financial assets Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are classified into the following specified categories: •  financial assets as at ‘fair value through profit or loss’ (FVTPL); •  ‘held to maturity’ investments; •  ‘available-for-sale’ (AFS) financial assets; and •  ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective interest method for financial assets The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL. Financial assets at FVTPL Financial assets are classified as at FVTPL where the financial asset is either: •  held for trading; or •  designated as at FVTPL. A financial asset is classified as held for trading if: •  it has been acquired principally for the purpose of selling in the near future; •  it is a part of an identified portfolio of financial instruments that the group and company manage together and has a recent actual pattern of short-term profit-taking; or •  it is a derivative that is not designated and effective as a hedging instrument. When a derivative that was previously designated as an effective hedging instrument no longer qualifies as such, or when a derivative becomes a designated and effective hedging instrument, such circumstances are not considered to be reclassification into or out of FVTPL in terms of the general prohibition on reclassifications into and out of this category.