notes to the financial statements
for the financial year ended 31 December 2014 (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.20 Financial assets (continued)
(e)
Impairment of financial assets (continued)
(i)
Financial assets carried at amortised cost (continued)
portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of
delayed payments in the portfolio past the average credit period and observable changes in economic conditions that correlate with default on
receivables.
If, any such evidence exists, the amount of impairment loss is measured as the difference between the 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 the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it
is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event 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 reversal is recognised in profit or loss.
(ii)
Unquoted equity investments carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of
insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has occurred, the amount
of the loss is measured as the difference between the 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. Such impairment losses are not reversed in subsequent periods.
(iii)
Available-for-sale financial assets - equity investments
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 are considerations to determine whether there is objective evidence that investment securities classified as available-
for-sale financial assets are impaired.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between
its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised. Where a
decline in the fair value of an available-for-sale financial asset has been previously recognised in other comprehensive income, and there is
evidence that the decline in fair value is due to an impairment loss, the cumulative loss previously recognised in other comprehensive income
is reclassified from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Instead, any increase
in fair value subsequent to impairment loss is recognised in other comprehensive income.
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Wah Seong Corporation Berhad • Annual Report 2014
