INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
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For the financial year ended 31 December 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.16 Impairment of financial assets
The Group assesses at each end of the reporting period whether there is any objective evidence that a financial asset
is impaired.
(a)
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment
exists individually for financial assets that are individually significant, or collectively for financial assets that
are not individually significant. If the Group determines that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, it includes the asset in a group of financial
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 financial 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 flows discounted at the financial 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 profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial asset 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 financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,
the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor
and default or significant 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 profit or loss.
(b)
Financial assets 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 a similar financial asset. Such impairment losses are not reversed in subsequent
periods.
2.17 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 amounts of cash which are subject to
an insignificant risk of changes in value.
Cash and cash equivalents carried in the consolidated balance sheet are classified and accounted for as loans and
receivables under FRS 39. The accounting policy for this category of financial assets is stated in Note 2.15.
