Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

Notes to the Financial Statements
For the fi nancial year ended 31 December 2011
2. Summary of signifi cant accounting policies (contd.)
2.19 Impairment of fi nancial assets (contd.)
(b) Unquoted equity securities carried at cost classifi ed as available-for-sale fi nancial assets
If there is objective evidence (such as signifi cant adverse changes in the business environment
where the issuer operates, probability of insolvency or signifi cant fi nancial diffi culties of the issuer)
that an impairment loss on fi nancial assets carried at cost has been incurred, the amount of the
loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash fl ows discounted at the current market rate of return for a similar fi nancial
asset. Such impairment losses are not reversed in subsequent periods.
2.20 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly
liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignifi cant risk of changes in value. These also include bank overdrafts that form an integral part of the
Group’s cash management.
2.21 Financial liabilities
Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into
and the defi nitions of a fi nancial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statement of fi nancial position when,
and only when, the Group and the Company become a party to the contractual provisions of the fi nancial
instrument. Financial liabilities are classifi ed as other fi nancial liabilities.
Other fi nancial liabilities
The Group’s and the Company’s fi nancial liabilities include trade payables, other payables, loans and
borrowings and income securities.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs
and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Borrowings are classifi ed as
current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting date.
The Income Securities, which are recognised as fi nancial liabilities are measured initially at its fair value,
which is the amount of proceeds received. In subsequent periods, the Income Securities are measured at
amortised cost using the effective interest rate method. The amortised cost of the Income Securities is the
amount at which the Income Securities are measured at initial recognition minus the principal repayments,
plus or minus the cumulative amortisation using the effective interest rate of any difference between the
initial amount and the maturity amount. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the Income Securities. When calculating the effective
interest rate, the Group has estimated cash fl ows considering all contractual terms of the Income Securities.
The amortised expense of the Income Securities, applying the effective interest rate, is recognised in profi t
or loss as fi nance costs in the period in which it is incurred.
Annual Report 2011 95