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Notes to Financial Statements
December 31, 2014
2. Summary of Significant Accounting Policies (cont’d)
FINANCIAL INSTRUMENTS (cont’d)
Financial assets (cont’d)
Available-for-sale financial assets
Certain shares and debt securities held by the Group are classified as being available-for-sale and are stated at fair
value. Fair value is determined in the manner described in Note 4. Gains and losses arising from changes in fair value
are recognised in other comprehensive income with the exception of impairment losses, interest calculated using
the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised
directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or
loss previously recognised in other comprehensive income and accumulated in fair value reserve is reclassified to
profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s
right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a
foreign currency is determined in that foreign currency and translated at the spot rate at end of the reporting period.
The change in fair value attributable to translation differences that result from a change in amortised cost of the
asset is recognised in profit or loss, and other changes are recognised in other comprehensive income.
Certain available-for-sale unquoted equity investments are initially recognised at fair value plus directly attributable
acquisition costs and are subsequently measured at cost less impairment loss as fair values cannot be reliably
measured.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as “loans and receivables”. Loans and receivables are measured at amortised cost using
the effective interest method less impairment. Interest is recognised by applying the effective interest rate method,
except for short-term receivables when the effect of discounting would be immaterial.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are
impaired where there is objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the investment below
its cost is considered to be objective evidence of impairment.
For financial assets, objective evidence of impairment could include:
• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for
a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the
number of delayed payments in the portfolio past the average credit period, as well as observable changes in
national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate.
