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Annual Report 2020
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Notes to the Financial Statements
As at 31 March 2020
kumpulan Fima Berhad
(197201000167)(11817-V)
2.
Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(s) Impairment of financial assets (cont’d.)
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date. The Group and the Company has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and
the economic environment.
The Group and the Company consider a financial asset in default when contractual payments are 90 days
past due. However, in certain cases, the Group and the Company may also consider a financial asset to be
in default when internal or external information indicates that the Group and the Company are unlikely to
receive the outstanding contractual amounts in full before taking into account any credit enhancements held
by the Group and the Company. A financial asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
(t) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss
or other financial liabilities, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade payables, other payables and amount due to related
companies.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
(i)
Other financial liabilities
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are
recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation
process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.