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NOTES TO THE FINANCIAL STATEMENTS
31 MARCH 2018
Kumpulan Fima Berhad (11817-V) •
Annual Report 2018
2.
Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(s) Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial
asset is impaired.
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 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 national
or local 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. 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 assets does not exceed its amortised cost at the reversal date. The
amount of reversal is recognised in the profit or loss.
(t) Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the
definitions of a financial liability.
Financial liabilities within the scope of FRS 139 Financial Instruments: Recognition and Measurement, are
recognised in the statement of financial position when, and only when, the Group and the Company become a
party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial
liabilities at fair value through profit or loss or other financial liabilities.
(i)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading or financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading includes derivatives entered into by the Group that do not meet the
hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at
fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives
include exchange differences.