INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
91.
N
O
T
E
S
T
O
T
H
E
F
IN
A
N
CI
AL
S
TA
TE
M
ENTS
For the financial year ended 31 December 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.29 Contingencies
A contingent liability is:
(a)
a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or
(b)
a present obligation that arises from past events but is not recognised because:
(i)
It is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or
(ii)
The amount of the obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities
assumed in a business combination that are present obligations and which the fair values can be reliably determined.
3.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the end of each reporting period. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the
future periods.
3.1
Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgements which have
the most significant effect on the amounts recognised in the consolidated financial statements:
(a)
Allowance for doubtful debts
Individual assessment
The Group evaluates specific accounts where it has information that certain customers are unable to meet
their financial obligations. In these cases, the Group uses judgement, based on the best available facts and
circumstances, including but not limited to, the length of its relationship with the customer and the customer’s
current credit status based on third party credit reports and known market factors, to record specific allowance
against amount due from such customers to reduce its receivable to the amount the Group expects to collect.
These specific allowances are re-evaluated and adjusted as additional information received affects the amounts
of allowance for doubtful debts.
Collective assessment
If the Group determines that no objective evidence of impairment exists for individually assessed trade
receivables, 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. The characteristics chosen are relevant to
the estimation of future cash flows for groups of such trade receivables by being indicative of the customers’
ability to pay all amounts due. Future cash flows in a group of trade receivables that are collectively evaluated
for impairment are estimated on the basis of historical loss experience for the trade receivables with credit risk
characteristics similar to those in the group.
The carrying amount of the Group’s trade receivables before allowance for doubtful debts as at 31 December
2015 is Rp810.1 billion (2014: Rp724.2 billion). Further details are disclosed in Note 23.
