Annual Report 2012 - Dialog

64 l Dialog Axiata PLC l Annual Report 2012
Notes to the Financial Statements
2 Summary of significant accounting policies contd.
2.8 Financial assets contd.
(iii) AFS financial assets
AFS financial assets are non-derivatives that are either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless the investment matures or management intends to dispose of it
within twelve (12) months from the end of the reporting period.
(iv) HTM financial assets
HTM financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Company’s and the Group’s management have the positive intention and ability to hold to maturity. If the Company and
the Group were to sell other than an insignificant amount of HTM financial assets, the whole category would be tainted and
reclassified as AFS. HTM financial assets are included in non-current assets, except for those with maturities less than twelve
(12) months from the end of the reporting period, which are classified as current assets.
(b) Recognition and initial measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Company and the
Group commit to purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at FvTPL.
Financial assets carried at FvTPL are initially recognised at fair value and transaction costs are expensed in the statement of
comprehensive income.
(c) Subsequent measurement - gains and losses
AFS financial assets and financial assets at FvTPL are subsequently carried at fair value. Loans and receivables and HTM
financial assets are subsequently carried at amortised cost using the effective interest method.
Changes in the fair values of financial assets at FvTPL, including the effects of currency translation are recognised in the
statement of comprehensive income in the period in which the changes arise.
(d) Subsequent measurement - Impairment of financial assets
(i) Assets carried at amortised cost
The Company and the Group assess at the end of each reporting period whether there is objective evidence that a financial
asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the
initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other
financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash
flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, 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 (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount
of the loss is recognised in the statement of comprehensive income. If a loan or held-to-maturity investment has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the