A N N U A L R E P O R T 2 0 1 6
80
NOTES TO THE
FINANCIAL STATEMENTS
For the Financial Year Ended 31 March 2016
2.
Summary of significant accounting policies (cont’d)
2.11
Financial instruments (cont’d)
(c)
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in the balance sheets, when and only when, there is
a currently enforceable legal right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the
assets and settle the liabilities simultaneously.
2.12
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired.
(a)
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of 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.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount
of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring
any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance
account. The impairment loss is recognised in profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial asset is reduced directly or if an amount was
charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the
financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers
factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in
payments.
