Section 8 UEM Edgenta Berhad FINANCIAL STATEMENTS 284 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023 2. ACCOUNTING POLICIES (CONTD.) 2.4 Summary of material accounting policies (contd.) (h) Financial instruments (contd.) (i) Financial assets (contd.) Impairment The Group and the Company recognise an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. For trade receivables and contract assets, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. In measuring ECLs, the Group and the Company take into account reasonable and supportable information that is available without undue cost or effort. This includes information about past events, current conditions and forward-looking factors specific to the debtors. The Group and the Company consider a financial asset in default when contractual payments are 120 days past due. However, in certain cases, the Group and the Company may also consider a financial asset to be in default when internal or external information indicates that the Group and the Company are unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group and the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. (ii) Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings and payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s and the Company’s financial liabilities include trade and other payables, borrowings and lease liabilities. Financial liabilities at amortised cost (loans and borrowings) This is the category most relevant to the Group and the Company. After initial recognition, trade payables, other payables and interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method.
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