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financiAL STATEMENTs
Annual Report 2017
107
NOTES TO THE FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)
2.3 Summary of Significant Accounting Policies (Cont’d.)
(j)
Financial Assets (Cont’d.)
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the
period generally established by regulation or convention in the marketplace concerned. All regular way purchases
and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the
Company commit to purchase or sell the asset.
(k) Impairment of Financial Assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial
asset is impaired.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,
the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties
of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade
receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a
collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables
could include the Group’s and the Company’s past experience of collecting payments, an increase in the number
of delayed payments in the portfolio past the average credit period and observable changes in national or local
economic conditions that correlate with default on receivables.
If any such evidence exists, the amount of impairment 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. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.
When a trade receivable becomes uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to
the extent that the carrying amount of the assets does not exceed its amortised cost at the reversal date. The amount
of reversal is recognised in the profit or loss.
(l)
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined on the First-In, First-Out (“FIFO”) basis. Cost of finished goods and work-in-progress includes
direct materials, direct labour, other direct costs and appropriate production overheads.
Net realisable value represents the estimated selling price in the ordinary course of business less all estimated costs
to completion and the estimated costs necessary to make the sale.
(m) Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and on hand, and demand deposits that are readily convertible to
known amount of cash and which are subject to an insignificant risk of changes in value.