for the year ended 31 December 2016
NOTES TO THE
FINANCIAL STATEMENTS
Baker Technology Limited
-
95
-
2.
Summaryofsignificantaccountingpolicies (cont’d)
2.10
Impairment of financial assets (cont’d)
(c)
Available-for-sale financial assets
In the case of equity investments classified as available-for-sale, objective evidence of impairment
include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant
changes with an adverse effect that have taken place in the technological, market, economic or legal
environment in which the issuer operates, and indicates that the cost of the investment in equity
instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the
investment below its costs. ‘Significant’ is to be evaluated against the original cost of the investment
and ‘prolonged’against the period inwhich the fair value has been below its original cost.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its
cost (net of any principal payment and amortisation) and its current fair value, less any impairment
loss previously recognised in the profit or loss, is transferred from other comprehensive income and
recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not
recognised in the profit or loss; increase in fair value after their impairment are recognised directly in
other comprehensive income.
In thecaseofdebt instrumentsclassifiedasavailable-for-sale, impairment isassessedbasedon thesame
criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is
the cumulative lossmeasured as the difference between the amortised cost and the current fair value,
less any impairment loss on that investment previously recognised in profit or loss. Future interest
income continues to be accrued based on the reduced carrying amount of the asset, using the rate
of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a
debt instrument increases and the increases can be objectively related to an event occurring after the
impairment losswas recognised in profit or loss, the impairment loss is reversed in profit or loss.
2.11
Cash and cash equivalents
Cashandcashequivalents comprisecashonhand, demanddeposits, and short-term, highly liquid investments
that are readilyconvertible toknownamountsof cashandwhichare subject toan insignificant riskof changes
in value. These also include bank overdrafts that form an integral part of theGroup’s cashmanagement.
