HAW PAR CORPORATION LIMITED
66
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
For the financial year ended 31 December 2014
2.
SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(i)
Financial assets
(continued)
(5)
Impairment (continued)
(ii)
Financial assets, available-for-sale
In addition to the objective evidence of impairment described in Note 2(i)(5)(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.
(j)
Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is determined on a weighted average
basis. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs
and related production overheads (based on normal operating capacity) but exclude borrowing costs. Net realisable
value is the estimated selling price in the ordinary course of business, less estimated costs of completion
and applicable variable selling expenses.
(k)
Operating leases
(1)
When a group company is the lessee:
Leases of property, plant and equipment where a substantial portion of the risks and rewards of ownership
is retained by the lessor are classified as operating leases. Payments made under operating leases (net
of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the
period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to
be made to the lessor by way of penalty is recognised as an expense in the period in which termination
takes place.
(2)
When a group company is the lessor:
Leases of investment properties to third parties where the Group retains substantially all risks and rewards
incidental to ownership of the leased assets are classified as operating leases.
Rental income from operating leases (net of any incentives given to lessees) is recognised in profit or loss
on a straight-line basis over the lease term.
When an operating lease is terminated before the lease period has expired, any payment required to
be made by the lessee by way of penalty is recognised as an income in the period in which termination
takes place, provided collection is reasonably assured.
