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annual report | 2012 Gunung Capital Berhad (330171-P)
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NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31 DECEMBER 2012
2 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.4 Summary of Significant Accounting Policies (cont’d)
(h) Impairment of Financial Assets
The Group and the Company assess at each reporting period whether they is any objective evidence that a
financial asset is impaired.
i) Trade and other receivables and other financial assets carried at amortised cost
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 is 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 financial
asset’s original effective interest rate. 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 asset does not exceed its amortised cost at
the reversal date. The amount of reversal is recognised in profit or loss.
ii) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where
the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an
impairment loss on financial assets carried at 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 current market rate of return for similar financial asset. Such impairment losses
are not reversed in subsequent periods.
iii) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer
or obligor, and the disappearance of an active trading market are considerations to determine whether
there is objective evidence that investment securities classified as available-for-sale financial assets are
impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its
cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss
previously recognised in profit or loss, is transferred from equity to profit or loss.