notes to the financial statements
for the financial year ended 31 December 2014 (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.20 Financial assets (continued)
(b)
Recognition and de-recognition
Regular purchases and sales of financial assets are recognised or derecognised on the trade date. Trade date refers to the date on which the Group and
the Company 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 or the Company has transferred substantially all risks and rewards of ownership. On disposal of a
financial asset, the difference between the carrying amount and the sale proceeds is recognised in profit or loss. Any amount in the fair value reserve
relating to that asset is transferred to profit or loss.
(c)
Initial measurement
Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss. Transaction
costs for financial assets at fair value through profit or loss are recognised immediately as expenses within profit or loss.
(d)
Subsequent measurement
(i)
Financial assets at fair value through profit or loss
Subsequent to initial recognition, financial asset at fair value through profit or loss are measured at fair value. Any gains or losses arising from
changes in fair value are recognised in profit or loss within ‘other gains/(losses)-net’. Exchange differences, interest and dividend income on
financial assets at fair value through profit or loss are recognised separately in profit or loss.
(ii)
Loans and receivables
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment.
Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation
process.
(iii)
Available-for-sale financial assets
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of
available-for-sale financial asset are recognised in other comprehensive income. When financial assets classified as available-for-sale are sold
or impaired, the accumulated fair value adjustments recognised within other comprehensive income are included in profit or loss.
Interest on available-for-sale financial assets calculated using the effective interest method is recognised in profit or loss as other income.
Dividends on available-for-sale financial assets are recognised in profit or loss when the Group’s right to receive payment is established.
Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
(e)
Impairment of financial assets
The Group and the Company assess at each reporting date whether there is objective evidence that a financial asset or group of financial assets is
impaired and recognises an allowance for impairment when such evidence exists.
(i)
Financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company
consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in
payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are
subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a
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Wah Seong Corporation Berhad • Annual Report 2014
