NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
71
ANNUAL REPORT 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.20 IMPAIRMENT OF ASSETS (CONT’D)
(b)
Financial assets (cont’d)
(ii)
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 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
current market rate of return for a similar financial asset.
Reversal of impairment
Such impairment losses are not reversed in subsequent periods.
(iii)
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 in which 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 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.
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
the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as
part of finance income.
Reversal of impairment
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.
For debt instruments, 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.
