94 95
2.
Significant accounting policies (continued)
2.15 Impairment of Financial Assets (Continued)
(a)
Financial assets carried at amortised cost (continued)
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.
To determine whether 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
delay in payments.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to
the extent the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of
reversal is recognised in 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 loss on financial assets
carried at cost had 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 current market rate of return for a
similar financial asset. Such impairment losses are not reversed in subsequent periods.
(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 declined
in the fair value of the investment below its costs.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost
(net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously
recognised in 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 profit or loss; increase in their fair value
after impairment are recognised directly in other comprehensive income.
In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as
financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured
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 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
loss was recognised in profit or loss, the impairment loss is reversed in profit or loss.
