Page 78 - TreasuryChinaTrust2011

76
Notes to the Financial Statements
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting
period to determine whether there is objective evidence that it is impaired. A financial asset is impaired
if objective evidence indicates that a loss event has occurred after the initial recognition of the asset,
and that the loss event has a negative effect on the estimated future cash flows of that asset that can
be estimated reliably.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both a specific asset and
collective level. All individually significant loans and receivables are assessed for specific impairment. All
individually significant receivables found not to be specifically impaired are then collectively assessed
for any impairment that has been incurred but not yet identified. Loans and receivables that are not
individually significant are collectively assessed for impairment by grouping together loans and receivables
with similar risk characteristics.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows,
discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and
reflected in an allowance account against loans and receivables or held-to-maturity investment securities.
Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment by
a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed
through profit or loss.
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses
accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from
equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and
amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss.
Changes in impairment provisions attributable to application of the effective interest method are reflected
as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-
sale debt security increases and the increase can be related objectively to an event occurring after the
impairment loss was recognised in profit or loss, then the impairment loss is reversed and the amount
of the reversal is recognised in profit or loss. However, any subsequent recovery in the fair value of an
impaired available-for-sale equity security is recognised in other comprehensive income.
SAR1112034_TCT_AR_().indb 76 3/23/2012