b'112 Mercia Asset Management PLC Annual Report and Accounts 2021Notes to the Company financial statementsFor the year ended 31 March 202134. Accounting policiesThe principal accounting policies applied in the presentation of the Company financial statements are set out below. These policies have been consistently applied throughout the year unless otherwise stated.General informationThe general information relating to Mercia Asset Management PLC (the Company) is set out in note 1 to the consolidated financial statements.Basis of preparationThe financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101, Reduced Disclosure Framework (FRS 101) and the Companies Act 2006 (the Act). FRS 101 sets out a reduced disclosure framework for a qualifying entity as defined in the standard, which addresses the financial reporting requirements and disclosure exemptions in the individual financial statements of qualifying entities.Based on the overall strength of the Companys balance sheet including its significant liquidity position at the year end together with its forecast future operating activities and having considered the ongoing impact of COVID-19 on the Companys operations, the Directors have a reasonable expectation that the Company has adequate financial resources to manage business risks in the current economic environment and continue in operational existence for a period of at least 12 months from the date of this report.Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.These financial statements are prepared under the historical cost convention. A summary of the Companys accounting policies, which have been consistently applied except where noted, is set out below.New standards, interpretations and amendments effective in the current financial yearThe new standards that became effective in the current financial year are disclosed in note 1 to the consolidated financial statements.Investments in subsidiary undertakingsInvestments in subsidiary undertakings are stated at cost less provision for any impairment losses.Property, plant and equipmentTangible assets are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their expected useful lives, using the straight-line method, on the following basis:Furniture, fixtures and office equipment33%Leasehold improvementsover the remaining life of the leaseThe estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.Share-based paymentsEquity-settled share-based payments to Executive Directors and certain employees of the Company, whereby recipients render services in exchange for shares or rights over shares, are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Companys estimate of equity instruments that will eventually vest. At each balance sheet date, the Company reviews its estimate. The impact of any revision of original estimates is recognised in the income statement, such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 6 to the consolidated financial statements.Cash, cash equivalents and short-term liquidity investmentsCash and cash equivalents include cash in hand, deposits held with banks and other short-term highly liquid investments with original maturities of less than three months. Short-term liquid investments with a maturity of over three months but less than 12 months are included in a separate category, short-term liquidity investments.'