Yinson Annual Report 2019

137 Yinson Group Overview Strategy and Sustainability Governance Accountability Annual General Meeting 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.17 Financial instruments (continued) (ii) Impairment of financial assets (continued) Accounting policies applied from 1 February 2018 (continued) (b) Simplified approach for trade receivables The Group and the Company apply the MFRS 9 simplified approach to measure ECL which uses a lifetime ECL for all trade receivables. The Group and the Company define a financial instrument as default, which is fully aligned with the definition of credit-impaired, when it meets one or more of the following criteria: (i) Quantitative criteria The Group and the Company define a financial instrument as default, when the counterparty fails to make contractual payment within 90 days of when they fall due. (ii) Qualitative criteria The debtor meets unlikeliness to pay criteria, which indicates the debtor is in significant financial difficulty. The Group and the Company consider the following instances: • the debtor is in breach of financial covenants • concessions have been made by the lender relating to the debtor’s financial difficulty • it isbecomingprobable that thedebtorwill enterbankruptcyor other financial reorganisation • the debtor is insolvent Financial instruments that are credit-impaired are assessed on individual basis. Note 42(b) sets out the measurement details of ECL. Accounting policies applied until 31 January 2018 The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred “loss event”), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.