Page 114 - S P Setia Annual Report 2013
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112 | Financial Statements S P SETIA BERHAD GROUP Annual Report 2013





NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2013 (CONT’D)






1. SiGniFicant accOUntinG POlicieS (cOnt’D)

(r) impairment of assets (cont’d)
(i) Trade and other receivables and other fnancial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on fnancial assets has been incurred, the Group and
the Company consider factors such as the probability of insolvency or signifcant fnancial diffculties of the debtor and default or
signifcant delay in payment. For certain categories of fnancial 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 portfolio of receivables could include the Group’s and the Company’s past experience of collecting
payment, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes
in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of the impairment loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash fows discounted at the fnancial asset’s original effective interest rate. The
impairment loss is recognised in proft or loss.

The carrying amount of the fnancial asset is reduced by the impairment loss directly for all fnancial 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
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 reversal is recognised in proft
or loss.

(ii) Unquoted equity securities carried at cost

If there is objective evidence (such as signifcant adverse changes in the business environment where the issuer operates, probability
of insolvency or signifcant fnancial diffculties of the issuer) that an impairment loss on fnancial assets carried at cost has been
incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash fows discounted at the current market rate of return for a similar fnancial assets. Such impairment losses
are not reversed in subsequent period.

(iii) Property, plant and equipment, investment properties, concession assets, land held for property development and investments in
subsidiary companies, associated companies and jointly controlled entities

Property, plant and equipment, investment properties, concession assets, land held for property development and investments
in subsidiary companies, associated companies and jointly controlled entities are assessed at each reporting date to determine
whether there is any indication of impairment.

If such an indication exists, the asset’s recoverable amount is estimated. The recoverable amount is the higher of an asset’s fair
value less cost to sell and its value in use. Value in use is the present value of the future cash fows expected to be derived from
the asset. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which
the asset belongs.

An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable
amount. Impairment losses are charged to proft or loss.

Any reversal of an impairment loss as a result of a subsequent increase in recoverable amount should not exceed the carrying
amount that would have been determined (net of amortisation or depreciation, if applicable) had no impairment loss been
previously recognised for the asset.
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