ANNUAL REPORT 2014
65
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
For the financial year ended 31 December 2014
2.
SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(i)
Financial assets
(continued)
(2)
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date - the date on which
the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the Group has transferred substantially all risks and rewards of
ownership.
On disposal of a financial asset, the difference between the net sale proceeds and its carrying amount
is recognised in profit or loss. Any amount in other comprehensive income and accumulated in the
fair value reserve relating to that asset is reclassified to profit or loss.
(3)
Initial measurement
Financial assets are initially recognised at fair value plus transaction costs.
(4)
Subsequent measurement
Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables are
subsequently carried at amortised cost using the effective interest method.
Changes in fair values of available-for-sale equity securities (i.e. non-monetary items) denominated in
foreign currencies are recognised in other comprehensive income and accumulated in the fair value
reserve, together with the related currency translation differences. Dividend income on available-for-
sale equity securities is recognised separately in profit or loss and in accordance with Note 2(b)(4).
(5)
Impairment
The Group assesses at the end of each reporting period 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
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 allowance for impairment loss account 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.
