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Notes to the Financial Statements
For the fnancial year ended 31 December 2012
3. Summary of significant accounting policies (cont’d)
3.16 Impairment of fnancial assets
The Group assesses at each end of the reporting period whether there is any objective evidence that a fnancial asset is impaired.
(a) Financial assets carried at amortised cost
For fnancial assets carried at amortised cost, the Group frst assesses whether objective evidence of impairment exists
individually for fnancial assets that are individually signifcant, or collectively for fnancial assets that are not individually
signifcant. If the Group determines that no objective evidence of impairment exists for an individually assessed fnancial
asset, whether signifcant or not, it includes the asset in a group of fnancial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment
loss is, or continues to be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on fnancial assets carried at amortised 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 fows discounted at the fnancial asset’s original effective interest rate. If a loan has a variable interest rate, the
discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account. The impairment loss is recognised in proft or loss.
When the asset becomes uncollectible, the carrying amount of impaired fnancial assets is reduced directly or if an amount
was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying
value of the fnancial asset.
To determine whether there is objective evidence that an impairment loss on fnancial assets has been incurred, the Group
considers factors such as the probability of insolvency or signifcant fnancial diffculties of the debtor and default or signifcant
delay in payments.
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 proft or loss.
(b) Financial assets carried at cost
If there is objective evidence (such as signifcant adverse changes in the business environment where the issuer operates,
probability of insolvency or signifcant fnancial diffculties of the issuer) that an impairment loss on fnancial 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 fows discounted at the current market rate of return for a similar fnancial asset.
Such impairment losses are not reversed in subsequent periods.
3.17 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and in banks, and short term deposits with an original maturity of 3 months
or less at the time of placements and are readily convertible to known amount of cash which are subject to an insignifcant risk of
changes in value.
Cash and cash equivalents carried in the consolidated balance sheet are classifed and accounted for as loans and receivables
under FRS 39. The accounting policy for this category of fnancial assets is stated in Note 3.14.
Indofood Agri Resources Ltd. • Annual Report 2012 79