Annual Report 2012, PDF - Axiata Group Berhad - Investor Relations

Axiata Group Berhad (242188-H) Annual Report 20123. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(g) Financial assets (continued)(iv) Subsequent measurement – Impairment of financial assets(a) Assets carried at amortised costThe Group and the Company assess at the end of the reporting period whether there is objectiveevidence that a financial asset or group of financial assets is impaired. A financial asset or a groupof financial assets is impaired and impairment losses are incurred only if there is objective evidenceof impairment as a result of one or more events that occurred after the initial recognition of theasset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cashflows of the financial asset or group of financial assets that can be reliably estimated.The criteria that the Group and the Company use to determine that there is objective evidenceof an impairment loss include:• Significant financial difficulty of the issuer or obligor;• A breach of contract, such as a default or delinquency in interest or principal payments;• The Group, for economic or legal reasons relating to the borrower’s financial difficulty, grantingto the borrower a concession that the lender would not otherwise consider;• It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;• 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 cashflows from a portfolio of financial assets since the initial recognition of those assets, althoughthe decrease cannot yet be identified with the individual financial assets in the portfolio,including:(i)adverse changes in the payment status of borrowers in the portfolio; and(ii) national or local economic conditions that correlate with defaults on the assets in theportfolio.The amount of the loss is measured as the difference between the asset’s carrying amount andthe present value of estimated future cash flows (excluding future credit losses that have not beenincurred) discounted at the financial asset’s original effective interest rate. The asset’s carryingamount of the asset is reduced and the amount of the loss is recognised in profit or loss. If ‘loansand receivables’ or a ‘HTM investment’ has a variable interest rate, the discount rate for measuringany impairment loss is the current effective interest rate determined under the contract. As apractical expedient, the Group and the Company may measure impairment on the basis of aninstrument’s fair value using an observable market price.If, in a subsequent period, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised (such as animprovement in the debtor’s credit rating), the reversal of the previously recognised impairmentloss is recognised in profit or loss.When an asset is uncollectible, it is written off against the related accumulated impairment lossesaccount. Such assets are written off after all the necessary procedures have been completed andthe amount of the loss has been determined.187