FIMA CORPORATION ANNUAL REPORT 2019

Notes To The

Financial Statements

As at 31 March 2019

Significant accounting policies (cont’d.)

2.3 Summary of significant accounting policies (cont’d.)

(k) Impairment of financial assets (cont’d.)

For trade receivables and contract assets, the Group and the Company applies a simplified

approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead

recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and the

Company has established a provision matrix that is based on its historical credit loss experience,

adjusted for forward-looking factors specific to the debtors and the economic environment.

The Group and the Company consider a financial asset in default when contractual payments are

90 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 is 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.

(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.

(n) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through

profit or loss or other financial liabilities, as appropriate.

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 financial liabilities include trade payables, other payables and amount due to related

companies.

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Fima Corporation Berhad

(21185-P)

Annual Report 2019