MS AR 2018 (1)
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An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference<br />
between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s<br />
original effective interest rate. Losses are recognized in statement of profit or loss and reflected in an allowance<br />
account. Interest on the impaired asset continues to be recognized through the unwinding of the discount. When<br />
a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is<br />
reversed through statement of profit or loss.<br />
5.11 Trade and other payables<br />
Trade and other payables are carried at cost which is the fair value of consideration paid or to be paid in the future<br />
for goods and services received, whether or not billed to the Company.<br />
5.12 Trade debts and other receivables<br />
Trade debts and other receivables are initially recognized at fair value plus any directly attributable transaction<br />
cost. Subsequent to initial recognition, these are measured at amortized cost using effective interest method,<br />
less any impairment losses. Provisions are provided against doubtful balances. Known bad debts are written off,<br />
when identified.<br />
5.13 Cash and cash equivalents<br />
Cash and cash equivalents are carried in the statement of financial position at cost. Cash and cash equivalents<br />
consist of cash and bank balances and temporary bank overdraft.<br />
5.14 Provisions<br />
A provision is recognized in the statement of financial position when the Company has a legal or constructive<br />
obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to<br />
settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are determined<br />
by discounting the expected future cash flows at a pre tax discount rate that reflects current market assessment<br />
of time value of money and risk specific to the liability. Provisions are reviewed at each reporting date and<br />
adjusted to reflect current best estimate.<br />
5.15 Contingent liabilities<br />
A contingent liability is disclosed when the Company has a possible obligation as a result of past events, whose<br />
existence will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events<br />
not wholly within the control of the Company; or the Company has a present legal or constructive obligation that<br />
arises from past events, but it is not probable that an outflow of resources embodying economic benefits will be<br />
required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.<br />
5.16 Borrowings and borrowing costs<br />
Borrowings are recognised initially at fair value and are subsequently carried at amortized cost. Borrowing costs<br />
are recognised as an expense in the period in which these are incurred except in cases where such costs are<br />
directly attributable to the acquisition, construction or production of a qualifying asset (one that takes substantial<br />
period of time to get ready for use or sale) in which case such costs are capitalised as part of the cost of that<br />
asset.<br />
5.17 Share capital<br />
Ordinary shares are classified as equity instruments and recognized at their fair value. Transaction costs of an<br />
equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly<br />
attributable to the equity transaction that otherwise would have been avoided.<br />
Annual Report <strong>2018</strong><br />
101
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