ASCENDAS india trust ANNUAL REPORT 2014/15
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For the financial year ended 31 March 2015
2.
Significant accounting policies (continued)
2.14 Financial Instruments (Continued)
(d)
Derivative financial instruments and hedging activities (continued)
(ii)
Cash flow hedge
Interest rate swaps
The Group has entered into interest rate swaps that are cash flow hedges of the Group’s exposure to interest
rate risk on its borrowings. These contracts entitle the Group to receive interest at floating rates on notional
principal amounts and oblige the Group to pay interest at fixed rates on the same notional principal amounts,
thus allowing the Group to raise borrowings at floating rates and swap them into fixed rates.
The fair value changes on the effective portion of the interest rate swaps designated as cash flow hedges are
recognised in other comprehensive income, accumulated in the hedging reserve and reclassified to profit or
loss when the hedged interest expense on the borrowings is recognised in profit or loss. The fair value changes
on the ineffective portion of interest rate swaps are recognised immediately in profit or loss.
Currency swaps
The Group has entered into currency swaps that qualify as cash flow hedges against highly probable forecasted
transactions in foreign currencies. The fair value changes on the effective portion of the currency swaps
designated as cash flow hedges are recognised in other comprehensive income, accumulated in the hedging
reserve and transferred to either the cost of a hedged non-monetary asset upon acquisition or profit or loss
when the hedged forecast transactions are recognised.
The fair value changes on the ineffective portion of currency swaps are recognised immediately in profit or
loss. When a forecasted transaction is no longer expected to occur, the gains and losses that were previously
recognised in other comprehensive income are reclassified to profit or loss immediately.
2.15 Impairment of Financial Assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset 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 are not individually
significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics
and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an
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,
the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The impairment
loss is recognised in profit or loss.
