Entire Document - Chris Hani District Municipality

6. FINANCIAL INSTRUMENTS (continued)6.4 Impairment of Financial Assets (continued)1.4.2Financial Assets at CostIf there is objective evidence that an impairment loss has been incurred on aninvestment in a Residual Interest that is not measured at fair value because its fairvalue cannot be measured reliably, the amount of the impairment loss is measuredas the difference between the carrying amount of the Financial Asset and the presentvalue of estimated future cash flows discounted at the current market rate of returnfor a similar financial asset. Such impairment losses shall not be reversed.1.5Derecognition of Financial AssetsThe municipality derecognises Financial Assets only when the contractual rights to thecash flows from the asset expires or it transfers the Financial Asset and substantiallyall the risks and rewards of ownership of the asset to another entity, except whenCouncil approves the write-off of Financial Assets due to non recoverability.Chapter 4If the municipality neither transfers nor retains substantially all the risks and rewards ofownership and continues to control the transferred asset, the municipality recognisesits retained interest in the asset and an associated liability for amounts it may have topay. If the municipality retains substantially all the risks and rewards of ownership ofa transferred Financial Asset, the municipality continues to recognise the FinancialAsset and also recognises a collateralised borrowing for the proceeds received.1.6Derecognition of Financial LiabilitiesThe municipality derecognises Financial Liabilities when, and only when, themunicipality’s obligations are discharged, cancelled or they expire.The municipality recognises the difference between the carrying amount of the FinancialLiability (or part of a Financial Liability) extinguished or transferred to another party and theconsideration paid, including any non-cash assets transferred or liabilities assumed, in theStatement of Financial Performance.259