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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.11 Impairment of financial assets
The Group assesses whether there is any objective evidence that a financial asset is impaired at the
end of each reporting period.
Loans and receivables
The Company collectively considers factors such as the probability of bankruptcy or significant
financial difficulties of the receivable, and default or significant delay in payments to determine
whether there is objective evidence that an impairment loss on loans and receivables has occurred.
Other objective evidence of impairment include historical collection rates determined on an
individual basis and observable changes in national and local economic conditions that are directly
correlated with the historical default rates of receivables.
If any such objective evidence exists, the amount of impairment loss is measured as the difference
between the financial asset’s carrying amount and the present value of estimated future cash flows
discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in
profit or loss.
The carrying amount of loans and receivables is reduced through the use of an allowance account.
If in a subsequent period, the amount of the impairment loss decreases and it objectively relates 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 asset does not exceed its amortised cost at
the reversal date. The amount of impairment reversed is recognised in profit or loss.
Available-for-sale financial assets
The Group collectively considers factors such as significant or prolonged decline in fair value below
cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active
trading market as objective evidence that available-for-sale financial assets are impaired.
If any such objective evidence exists, an amount comprising the difference between the financial
asset’s cost (net of any principal payment and amortisation) and current fair value, less any impairment
loss previously recognised in profit or loss, is transferred from equity to profit to loss.
Impairment losses in respect of unquoted equity instrument that is carried at cost is recognised in
profit or loss and is measured as the difference between the financial asset’s carrying amount and
the present value of estimated cash flows discounted at the current market rate of return for a similar
financial asset.
Impairment losses on available-for-sale equity instruments are not reversed in profit or loss in the
subsequent periods. Instead, any increase in the fair value subsequent to the impairment loss is
recognised in other comprehensive income.
Impairment losses on available-for-sale debt investments are subsequently reversed in profit or loss if
the increase in the fair value of the investment can be objectively related to an event occurring after
the recognition of the impairment loss in profit or loss.