axiata group berhad | annual report 2015
136
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Financial assets (continued)
(iv) Subsequent measurement - Impairment of financial assets (continued)
(a) Assets carried at amortised cost (continued)
•
Disappearance of an active market for that financial asset because of financial difficulties; or
•
Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial
assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial
assets in the portfolio, including:
(i)
adverse changes in the payment status of borrowers in the portfolio; and
(ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.
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 (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective
interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If ‘loans
and receivables’ or a ‘HTM investment’ has a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate determined under the contract. As a practical expedient, the Group and the Company may measure
impairment on the basis of an instrument’s fair value using an observable market price.
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 (such as an improvement in the debtor’s credit rating), the reversal of the previously
recognised impairment loss is recognised in profit or loss.
When an asset is uncollectible, it is written off against the related accumulated impairment losses account. Such assets are written
off after all the necessary procedures have been completed and the amount of the loss has been determined.
(b) Assets classified as AFS
The Group and the Company assess at the end of the reporting period whether there is objective evidence that a financial asset or
a group of financial assets is impaired.
For debt securities, the Group and the Company uses criteria and measurement of impairment loss applicable for ‘assets carried at
amortised cost’ above.
In the case of equity securities classified as AFS, in addition to the criteria for ‘assets carried at amortised cost’ above, a significant
or prolonged decline in the fair value of the security below its cost is also considered as an indicator that the assets are impaired. If
any such evidence exists for AFS financial assets, the cumulative loss that had been recognised directly in equity is removed from
equity and recognised in profit or loss. The amount of cumulative loss that is reclassified to profit or loss is the difference between
the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss.
Impairment losses recognised in profit or loss on equity instruments classified as AFS are not reversed through profit or loss.
(v) De-recognition
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and
the Group and the Company have transferred substantially all risks and rewards of ownership.
Receivables that are factored out to banks and other financial institutions with recourse to the Group and the Company are not derecognised
until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash
received from the financial institutions is recorded as borrowings.
