Annual Report - QuamIR

Notes to the Consolidated Financial Statements (Continued)
2 Summary of significant accounting policies (Continued)
2.18 Trade and other receivables
Trade and other receivables, including deposit paid for a property
development project, are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. A provision for
impairment of trade and other receivables is established when
there is objective evidence that the Group will not be able
to collect all amounts due according to the original terms of
the receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired. The
amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The
amount of the provision is recognised in the consolidated income
statement. When a trade receivable is uncollectible, it is written
off against other expenses in the consolidated income statement.
Subsequent recoveries of amounts previously written off are
credited to other income in the consolidated income statement.
2.19 Borrowings
Borrowings are recognised initially at fair value, net of transaction
costs incurred. Borrowings are subsequently stated at amortised
cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the consolidated
income statement over the period of the borrowings using the
effective interest method.
2
2.18
2.19
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it
relates.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for at
least twelve months after the balance sheet date.
100 HKC (Holdings) Limited • Annual Report 2011