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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Impairment
(i)
Impairment of Financial Assets
All financial assets (other than those categorised at fair value through profit or loss) are assessed at the end of each
reporting period whether there is any objective evidence of impairment as a result of one or more events having an
impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline
in the fair value below its cost is considered to be objective evidence of impairment.
An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is
recognised in profit or loss and 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.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured
as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less
any impairment loss previously recognised in the fair value reserve. In addition, the cumulative loss recognised
in other comprehensive income and accumulated in equity under fair value reserve, is reclassified from equity to
profit or loss.
With the exception of available-for-sale equity instruments, 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 through profit or loss to the extent that the
carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments,
impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair
value subsequent to an impairment loss made is recognised in other comprehensive income.
(ii) Impairment of Non-Financial assets
The carrying values of assets, other than those to which MFRS 136 - Impairment of Assets does not apply,
are reviewed at the end of each reporting period for impairment when an annual impairment assessment is
compulsory or there is an indication that the assets might be impaired. Impairment is measured by comparing
the carrying values of the assets with their recoverable amounts. When the carrying amount of an asset exceeds
its recoverable amount, the asset is written down to its recoverable amount and an impairment loss shall be
recognised. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their
value‑in‑use, which is measured by reference to discounted future cash flow using a pre-tax discount rate. Where
it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
An impairment loss is recognised in profit or loss immediately.
In respect of assets other than goodwill, when there is a change in the estimates used to determine the recoverable
amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous
impairment loss and is recognised to the extent of the carrying amount of the asset that would have been
determined (net of amortisation and depreciation) had no impairment loss been recognised.
Assets Under Finance Leases and Hire Purchase
Leases of plant and equipment where substantially all the benefits and risks of ownership are transferred to the Group
are classified as finance leases. Plant and equipment acquired under finance lease and hire purchase are capitalised in
the financial statements at the lower of the fair value of the leased assets and the present value of the minimum lease
payments.
NOTES TO THE FINANCIAL STATEMENTS
(cont’d)