for the year ended 31 December 2016
NOTES TO THE
FINANCIAL STATEMENTS
Annual Report 2016
-
94
-
2.
Summaryofsignificantaccountingpolicies (cont’d)
2.10
Impairment of financial assets
TheGroupassessesateachreportingdatewhether there isanyobjectiveevidence thatafinancialasset is impaired.
(a)
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of
impairment exists individually for financial assets that are individually significant, or collectively for
financial assets that arenot individually significant. If theGroupdetermines that noobjectiveevidence
of impairment exists for an individually assessed financial asset,whether significant or not, it includes
the asset in a group of financial assetswith similar credit risk characteristics and collectively assesses
them for impairment.Assets that are individuallyassessed for impairment and forwhichan impairment
loss is, or continues to be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has
been incurred, theamount of the loss ismeasuredas thedifferencebetween theasset’scarryingamount
and thepresentvalueofestimated futurecash flowsdiscountedat the financial asset’soriginal effective
interest rate. If a loan has a variable interest rate, the discount rate formeasuring any impairment loss
is the current effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account. The impairment loss is recognised in the profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced
directly or if an amount was charged to the allowance account, the amounts charged to the allowance
account arewritten off against the carrying value of the financial asset.
To determinewhether there is objective evidence that an impairment loss on financial assets has been
incurred, the Group considers factors such as the probability of insolvency or significant financial
difficulties of the debtor and default or significant delay in payments.
If, ina subsequent period, theamount of the impairment lossdecreases and thedecreasecanbe related
objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed to the extent that the carrying value of the asset does not exceed its
amortised cost at the reversal date. The amount of reversal is recognised in the profit or loss.
(b)
Financial assets carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where
the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an
impairment lossona financial asset carriedat cost hasbeen incurred, theamount of the loss ismeasured
as the difference between the asset’s carrying amount and the present value of estimated future cash
flows discounted at the current market rate of return for a similar financial asset. Such impairment
losses are not reversed in subsequent periods.
