Ni Hsin Berhad Annual Report 2018

23. Financial instruments (continued) 23.4 Credit risk (continued) Inter-company loans and advances (continued) Recognition and measurement of Impairment losses Generally, the Company considers advances to subsidiaries have low credit risk. The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. As the Company is able to determine the timing of payments of the subsidiaries’ advances when they are payable, the Company considers the advances to be in default when the subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s loan or advance to be credit impaired when: • The subsidiary is unlikely to repay its loan or advance to the Company in full; • The subsidiary’s loan or advance is overdue for more than 365 days; or • The subsidiary is continuously loss making and is having a deficit shareholders’ fund. The Company determines the probability of default for these loans and advances individually using internal information available. The following table provides information about the exposure to credit risk for subsidiaries’ advances as at 31 December 2018. Gross Impairment carrying loss Net amount allowances balance Company RM’000 RM’000 RM’000 2018 Credit impaired 3,498 (3,498) - The movements in the allowance for impairment in respect of subsidiaries’ advances during the year is as follows: 2018 Lifetime ECL Company RM’000 Balance at 1 January per MFRS139 and MFRS9 490 Increase in allowance loss 3,008 Balance at 31 December 3,498 Notes to the financial statements (continued) Annual Report 2018 90