128 | S P SETIA BERHAD GROUP | Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 October 2014
V. FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(p) Financial instruments (cont’d)
(iii) Derecognition of financial assets and liabilities
A financial asset or part of it is derecognised when the contractual rights to the cash flows from the financial asset expire or
the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received
together with any cumulative gain or loss that has been recognised in other comprehensive income is recognised in profit or
A financial liability or part of it is derecognised when the obligation specified in the contract is discharged, cancelled or expired.
On derecognition of a financial liability, the difference between the carrying amount and the consideration paid, including any
non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
(q) Impairment of assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.
(i) Trade and other receivables and other 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 payment. 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 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 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
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
profit or loss.
(ii) Unquoted equity securities 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 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 flows discounted at the current market rate of return for a similar financial assets. Such
impairment losses are not reversed in subsequent period.