2. Summary of significant accounting policies (cont’d)
2.16 Impairment of financial assets (cont’d)
(a) Financial assets carried at amortised cost (cont’d)
When the asset becomes uncollectible, the carrying amount of impaired financial
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 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 value 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 had 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 Inventories
Raw materials consist mainly of steel, consumables and other materials used for
shipbuilding and shiprepair and conversion. Finished goods consist of component parts
for trading purposes. These inventories are determined on a first-in-first-out basis and
include all cost in bringing the stocks to their present location and condition. Net realisable
value is the estimated selling price in the ordinary course of business less estimated costs
of completion and the estimated costs necessary to make the sale, and after making due
allowance for all damaged, obsolete and slow-moving items.
Work-in-progress comprises uncompleted shipbuilding projects. It is stated at the lower
of cost and net realisable value. Cost is made up of material, direct labour, subcontractors’
costs, appropriate allocation of fixed and variable production overheads and other directly
related expenses. Provision is made for anticipated losses, if any, on work-in progress
when the possibility of loss is ascertained.
NOTES TO THE FINANCIAL
STATEMENTS
For the financial year ended 30 June 2015
ASL Marine Holdings Ltd. /Annual Report 2015
90
