103
ANNUAL REPORT 2016
NOTES TOTHE FINANCIAL STATEMENTS
30 JUNE 2016
(Continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.12 Impairment of financial assets
The Group assesses whether there is any objective evidence that a financial asset is impaired at the end of each reporting period.
(a)
Loans and receivables
The Group collectively considers factors such as the probability of bankruptcy or significant financial difficulties of the
receivable, and default or significant delay in payments by the receivable, to determine whether there is objective evidence
that an impairment loss on loans and receivables has occurred. Other objective evidence of impairment include historical
collection rates determined on an individual basis and observable changes in national or local economic conditions that are
directly correlated with the historical default rates of receivables.
If any such objective evidence exists, the amount of impairment loss is measured as the difference between the financial asset’s
carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest
rate. The impairment loss is recognised in profit or loss.
The carrying amount of loans and receivables are reduced through the use of an allowance account.
If in a subsequent period, the amount of the impairment loss decreases and it objectively relates to an event occurring after the
impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the
asset does not exceed its amortised cost at the reversal date. The amount of impairment reversed is recognised in profit or loss.
(b)
Available-for-sale financial assets
The Group collectively considers factors such as significant or prolonged decline in fair value below cost, significant financial
difficulties of the issuer or obligor, and the disappearance of an active trading market as objective evidence that available-for-
sale financial assets are impaired.
If any such objective evidence exists, an amount comprising the difference between the financial asset’s cost (net of any
principal payment and amortisation) and current fair value, less any impairment loss previously recognised in profit or loss, is
transferred from equity to profit or loss.
Impairment losses in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured
as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted
at the current market rate of return for a similar financial asset.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Instead,
any increase in the fair value subsequent to the impairment loss is recognised in other comprehensive income.
Impairment losses on available-for-sale debt investments are subsequently reversed in profit or loss if the increase in the fair
value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or
loss.
4.13 Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualified asset is capitalised as part of
the cost of the asset until when substantially all the activities necessary to prepare the asset for its intended use or sale are complete,
after which such expense is charged to profit or loss. A qualifying asset is an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale. Capitalisation of borrowing cost is suspended during extended periods in which active
development is interrupted.
The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the borrowing during the period
less any investment income on the temporary investment of the borrowing.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
