NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
70
THE STRAITS TRADING COMPANY LIMITED
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.20 IMPAIRMENT OF ASSETS (CONT’D)
(a)
Non-financial assets (cont’d)
Reversal of impairment
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication
that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists,
the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount
since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its
recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless
the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.
(b)
Financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired.
(i)
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 carrying amount of the asset is reduced through the use of an allowance account.
The impairment loss is recognised in profit or loss.
When the assets become 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 default or significant delay in payments.
Reversal of impairment
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 that the carrying value of the asset does not exceed its amortised cost at the
reversal date. The amount of reversal is recognised in profit or loss.
