Notes to the Consolidated Financial Statements - Seylan Bank

280 North Bound > Seylan Bank Annual Report 2011
Notes to the Consolidated Financial Statements
3.3.10 Leased Assets - Lessee
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are
classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to
the lower of its fair value and the present value of the minimum lease payments. Subsequent to the initial
recognition, the asset is accounted for in accordance with SLAS 19 - ‘Leases’.
Other leases are operating leases and, except for investment property, the leased assets are not
recognised in the Group Balance Sheet.
3.3.11 Impairment
3.3.11.1 Financial Assets
The Bank assesses at each Balance Sheet date whether there is objective evidence that a financial asset is
impaired. A financial asset is impaired and impairment losses are incurred if and only if, there is objective
evidence of impairment as a result of one or more loss events that occurred after the initial recognition
of the asset and prior to the Balance Sheet date (‘a loss event’), and that loss event or events have had an
impact on the estimated realisable value of the asset.
The Bank assesses whether objective evidence of impairment exists for financial assets that are
significant (except for loans and advance explained in Note 3.3.4). For loans and advances, impairment loss
is measured individually and collectively as explained in Note 21.5.
When a loan is uncollectible, it is written off against the related provision. Such loans are written off
after all the necessary procedures have been completed and the amount of the loss has been determined.
Subsequent recoveries of the amounts previously written off are included under ‘Other Income’ in the
Income Statement.
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 by adjusting the impairment provision account. The amount of the reversal is recognised in
the Income Statement.
3.3.11.2 Non-Financial Assets
The carrying values of Property, Plant & Equipment and Investment Properties are reviewed for impairment
annually or when events or changes in circumstances indicate that the carrying value may not be recoverable.
If such indications exist and where the carrying values exceed the estimated recoverable amount, the assets
are written down to their recoverable amount. Impairment losses are recognised in the Income Statement,
unless it reverses a previous revaluation surplus for the same asset.
Assets with an indefinite useful life are not subject to amortisation and are tested on an annual basis
for impairment and additionally whenever an indication of impairment exists. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
The recoverable amount of an asset is the higher of its fair value, less cost to sell or its value in use. Any
decrease in the carrying value is recognised as an expense in the Income Statement in the reporting period
in which the impairment loss occurs.