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Kumpulan Fima Berhad



Notes to the

financial statements

31 march 2017


Significant accounting policies (cont’d.)

2.3 Summary of significant accounting policies (cont’d.)


Financial assets


A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On

derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the

consideration received and any cumulative gain or loss that had been recognised in other comprehensive income

is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the

period generally established by regulation or convention in the marketplace concerned. All regular way purchases

and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the

Company commit to purchase or sell the asset.


Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial

asset is impaired.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,

the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties

of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade

receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment

on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of

receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in

the number of delayed payments in the portfolio past the average credit period and observable changes in national

or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment 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. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the

exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

When a trade receivable becomes uncollectible, it is written off against the allowance account.

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 assets does not exceed its amortised cost at the reversal date. The

amount of reversal is recognised in the profit or loss.


Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the

definitions of a financial liability.

Financial liabilities within the scope of FRS 139 Financial Instruments: Recognition andMeasurement, are recognised

in the statement of financial position when, and only when, the Group and the Company become a party to the

contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair

value through profit or loss or other financial liabilities.