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NOTES TO THE FINANCIAL STATEMENTS
For the Ànancial year ended 31 December 2013
95
Annual Report 2013
F i nanc i a l Statement s
2.
Significant accounting policies
(continued)
2.11 Financial assets (continued)
(d)
Subsequent measurement
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently
carried at fair value. Loans and receivables and held-to-maturity financial assets are subsequently carried at
amortised cost using the effective interest method.
Changes in the fair value of financial assets at fair value through profit or loss including the effects of currency
translation, interest and dividends, are recognised in the income statement when the changes arise.
Interest and dividend income on available-for-sale financial assets are recognised separately in the income
statement. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated
in foreign currencies are analysed into currency translation differences on the amortised cost of the securities
and other changes; the currency translation differences are recognised in the income statement and the
other changes are recognised in other comprehensive income and accumulated in the fair value reserve.
Changes in fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in
other comprehensive income and accumulated in the fair value reserve, together with the related currency
translation differences.
(e)
Impairment
The Group assesses at each balance sheet date whether there is 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/Held-to-maturity financial assets
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, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are recognised against the same line item in the income statement.
The impairment allowance is reduced through the income statement in a subsequent period when
the amount of impairment loss decreases and the related decrease can be objectively measured.
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.
(ii)
Available-for-sale financial assets
In addition to the objective evidence of impairment described in Note 2.11(e)(i), a significant or
prolonged decline in the fair value of an equity security below its cost is considered as an indicator
that the available-for-sale financial asset is impaired.
If any evidence of impairment exists, the cumulative loss that was previously recognised in other
comprehensive income is reclassified to the income statement. The cumulative loss is measured as
the difference between the acquisition cost (net of any principal repayments and amortisation) and
the current fair value, less any impairment loss previously recognised as an expense. The impairment
losses recognised as an expense on equity securities are not reversed through the income statement.
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