NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
95
Annual Report 2014
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 profit or loss when the changes arise.
Interest and dividend income on available-for-sale financial assets are recognised separately
in profit or loss. 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 profit or loss 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
profit or loss.
The impairment allowance is reduced through profit or loss 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 profit or loss. 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 profit or loss.
