2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12 Financial instruments (continued)
(b)
Financial liabilities (continued)
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a de-recognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying
amounts is recognised in profit or loss.
2.13 Impairment of financial assets
The Group assesses at each reporting date 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 assets 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.
66
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2015
