Interim Report 2012 - TodayIR.com

Notes to Financial Statements30 June 20122.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Impairment of financial assets (Continued)Available-for-sale financial investmentsFor available-for-sale financial investments, the Group assesses at the end of each reporting period whether there is objectiveevidence that an investment or a group of investments is impaired.If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment andamortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is removed fromother comprehensive income and recognised in the income statement.In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged declinein the fair value of an investment below its cost. The determination of what is “significant” or “prolonged” requires judgement.“Significant” is evaluated against the original cost of the investment and “prolonged” against the period in which the fair value hasbeen below its original cost. Where there is evidence of impairment, the cumulative loss – measured as the difference between theacquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement– is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity instrumentsclassified as available for sale are not reversed through the income statement. Increases in their fair value after impairment arerecognised directly in other comprehensive income.In the case of debt instruments classified as available for sale, impairment is assessed based on the same criteria as financial assetscarried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference betweenthe amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the incomestatement. Future interest income continues to be accrued based on the reduced carrying amount of the asset and is accrued usingthe rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income isrecorded as part of finance income. Impairment losses on debt instruments are reversed through the income statement, if the increasein fair value of the instruments can be objectively related to an event occurring after the impairment loss was recognised in theincome statement.Financial liabilitiesInitial recognition and measurementFinancial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans andborrowings or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines theclassification of its financial liabilities at initial recognition.All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, directly attributable transactioncosts.The Group’s financial liabilities include trade payables, other payables and accruals, interest-bearing bank loans and long-termpayables.34XIAO NAN GUO RESTAURANTS HOLDINGS LIMITED