2. Summary of significant accounting policies (cont’d)
2.14 Financial instruments (cont’d)
(c) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in
the balance sheets, when and only when, there is a current enforceable legal right
to set off the recognised amounts and there is an intention to settle on a net basis,
or to realise the assets and settle the liabilities simultaneously.
2.15 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and demand deposits that
are readily convertible to known amount of cash and which are subject to an insignificant
risk of changes in value. These also include bank overdrafts that form an integral part of
the Group’s cash management.
Cash and cash equivalents carried in the statements of financial position are classified
and accounted for as loans and receivables. The accounting policy for this category of
financial assets is stated in Note 2.14(a)(ii).
2.16 Impairment of financial assets
The Group assesses at each reporting date 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.
NOTES TO THE FINANCIAL
STATEMENTS
For the financial year ended 30 June 2015
ASL Marine Holdings Ltd. /Annual Report 2015
89
