Annual Report 2012 - IOI Group

5. SIGNIFICANT ACCOUNTING POLICIES (Continued)5.15 Impairment of Financial AssetsThe Group assesses whether there is any objective evidence that a financial asset is impaired at the end of each reportingperiod.i. Held-to-maturity investments and loans and receivablesThe Group collectively considers factors such as the probability of bankruptcy or significant financial difficulties of thereceivable or investee, and default or significant delay in payments to determine whether there is objective evidencethat an impairment loss on held-to-maturity investments and loans and receivables has occurred. Other objectiveevidence of impairment includes historical collection rates determined on an individual basis and observable changesin national or local economic conditions that are directly correlated with the historical default rates of receivables.If any such objective evidence exists, the amount of impairment loss is measured as the difference between the financialasset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s originaleffective interest rate. The impairment loss is recognised in profit or loss.The carrying amount of held-to-maturity investments is directly reduced by the impairment loss whilst the carryingamount of loans and receivables are reduced through the use of an allowance account.If in a subsequent period, the amount of the impairment loss decreases and it objectively relates to an event occurringafter the impairment was recognised, the previously recognised impairment loss is reversed to the extent that thecarrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of impairmentreversed is recognised in profit or loss.ii.Available-for-sale financial assetsThe Group collectively considers factors such as significant or prolonged decline in fair value below cost, significantfinancial difficulties of the issuer or obligor, and the disappearance of an active trading market as objective evidencethat available-for-sale financial assets are impaired.If any such objective evidence exists, an amount comprising the difference between the financial asset’s cost (net ofany principal payment and amortisation) and current fair value, less any impairment loss previously recognised in profitor loss, is transferred from equity to profit or loss.Impairment losses on available-for-sale equity investments are not reversed in profit or loss in subsequent periods.Instead, any increase in fair value subsequent to the impairment loss is recognised in other comprehensive income.Impairment losses on available-for-sale debt investments are subsequently reversed in profit or loss if the increase inthe fair value of the investment can be objectively related to an event occurring after the recognition of the impairmentloss in profit or loss.Annual Report 2012IOI CORPORATION BERHAD 147