NOTES TO THE FINANCIAL STATEMENTS
FOR THE FInAncIAL yEAR EnDED 30 JunE 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
h)
Financial assets (cont’d)
Impairment
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a
group of financial assets is impaired.
Financial assets carried at amortised cost
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation, and default or delinquency in payments are considered indicators that the
receivable is impaired.
The carrying amount of these assets is reduced through the use of an impairment allowance account,
and the amount of the loss is recognised in profit or loss. The allowance amount is the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. When the asset becomes uncollectible, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are recognised against the
same line item in profit or loss.
If in subsequent periods, the impairment loss decreases, and the decrease can be related objectively to
an event occurring after the impairment loss was recognised, the previously recognised impairment loss
is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its
amortised cost at the reversed date.
Financial assets, held-to-maturity
If there is objective evidence that an impairment loss on held-to-maturity financial assets has incurred,
the carrying amount of the asset is reduced by an allowance for impairment and the impairment loss
is recognised in profit or loss. This allowance, calculated as the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest
rate, is recognised in profit or loss in the period in which the impairment occurs.
Impairment loss is reversed through the profit or loss if the impairment loss decrease can be related
objectively to an event occurring after the impairment loss was recognised. The carrying amount of the
asset previously impaired is increased to the extent that the new carrying amount does not exceed the
amortised cost had no impairment been recognised in prior periods.
i)
Impairment of non-financial assets excluding goodwill
At each reporting date, the Group assesses the carrying amounts of its non-financial assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
73
ISOTEAM LTD.
ANNUAL REPORT 2016
