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2.
Significant accounting policies (continued)
2.7 Financial Assets (Continued)
(c)
Initial measurement
Financial assets classified in Note 2.7(a)(i) and (ii) are initially recognised at fair value plus directly attributable
transaction costs.
(d)
Subsequent measurement
Loans and receivables are subsequently carried at amortised cost using the effective interest method, less impairment.
Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and
through the amortisation process.
Available-for-sale financial assets are subsequently measured at fair value. Any gains or losses from changes in fair
value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign
exchange gains and losses on monetary instruments and interest calculated using the effective interest method are
recognised in profit or loss.
When available-for-sale financial assets are sold or impaired, the accumulated fair value adjustments recognised in
the fair value reserve are transferred to profit or loss as gain or loss.
Interest and dividend income on available-for-sale financial assets are recognised separately in profit or loss.
(e)
Regular way purchase or sale of financial assets
All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date
that the Company commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the period generally established by regulation or convention in
the marketplace concerned.
(f)
Impairment
The Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or a
group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.
(i)
Loans and receivables
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or
significant delay in payments are objective evidence that these financial assets are impaired.
The carrying amount of these assets is reduced through the use of an impairment allowance account which
is calculated as the difference between the carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. When the asset becomes uncollectible, the carrying
amount of impaired financial asset is reduced directly or if an amount was charged to the allowance account,
the amounts charged to the allowance account are written off against the carrying value of the financial asset.
Subsequent recovery of amounts previously written off is recognised against the same line item in profit or loss.
The allowance for impairment loss account is reduced through profit or loss in a subsequent period when the
amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised. The carrying amount of the asset previously impaired is increased to the
extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised
in prior periods.
