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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
the fair value of the “financial assets at fair value
through profit or loss” category are included in
the income statement in the period in which they
2.9 Impairment of assets
2.9.1 Impairment of financial assets
arise. Gains and losses arising from changes in
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the fair value of available-for-sale financial assets
are recognised directly in equity, until the financial
asset is derecognised or impaired. At this time,
the cumulative gain or loss previously recognised
in equity is recognised in profit or loss. However,
interest calculated using the effective interest
method and foreign currency gains and losses on
monetary assets classified as available for sale are
recognised in the income statement. Dividends on
available-for-sale equity instruments are recognised
in the income statement when the entity’s right to
receive payment is established.
The fair values of quoted investments in active
markets are based on current bid prices. If there
is no active market for a financial asset, the Group
establishes fair value using valuation techniques.
These include the use of recent arm’s length
transactions, discounted cash flow analysis and
other valuation techniques commonly used by
market participants.
a) Financial assets carried at amortised cost
The Group assesses at each balance sheet date 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 if, and 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. Objective evidence that a financial asset or
group of assets is impaired includes observable data that
comes to the attention of the Group about the following
loss events:
- significant financial difficulty of the issuer;
- a breach of contract, such as a default or
delinquency in interest or principal payments;
- the Group granting to the borrower, for economic
or legal reasons relating to the borrower’s financial
difficulty, a concession that the lender would not
otherwise consider;
- it becoming probable that the borrower will enter
bankruptcy or other financial reorganisation;
- the disappearance of an active market for that
financial asset because of financial difficulties; or
- observable data indicating that there is a
measurable decrease in the estimated future cash
flows from a group of financial assets since the