For the financial year ended 31 December 2015
66
HAW PAR CORPORATION LIMITED
2. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(i) Financial assets
(continued)
(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.
(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.
NOT E S TO T H E F I NAN C I A L S TAT EME N T S
(CONTINUED)
