53
Annual Report 2015
TEHO INTERNATIONAL INC LTD.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.8 Development properties (cont’d)
(ii) Properties under development, the sales of which are recognised using
completion of construction method
The aggregated costs incurred are presented as development properties while
progress billings are presented separately as deferred income in the statement of
financial position.
3.9 Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss, including an interest in
an associate, is assessed at the end of each reporting period to determine whether
there is objective evidence that it is impaired. A financial asset is impaired if objective
evidence indicates that a loss event(s) has occurred after the initial recognition of the
asset, and that the loss event(s) has an impact on the estimated future cash flows of
that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can
include default or delinquency by a debtor, restructuring of an amount due to the
Group on terms that the Group would not consider otherwise, indications that a
debtor or issuer will enter bankruptcy, adverse changes in the payment status of
borrowers or issuers in the group, economic conditions that correlate with defaults or
the disappearance of an active market for a security. In addition, for an investment in
an equity security, a significant or prolonged decline in its fair value below its cost is
objective evidence of impairment.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both a
specific asset and collective level. All individually significant loans and receivables are
assessed for specific impairment. All individually significant receivables found not to
be specifically impaired are then collectively assessed for any impairment that has
been incurred but not yet identified. Loans and receivables that are not individually
significant are collectively assessed for impairment by grouping together loans and
receivables with similar risk characteristics.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.9 Impairment (cont’d)
(i) Non-derivative financial assets (cont’d)
In assessing collective impairment, the Group uses historical trends of the probability
of default, the timing of recoveries and the amount of loss incurred, adjusted for
management’s judgement as to whether current economic and credit conditions
are such that the actual losses are likely to be greater or less than suggested by
historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount and the present value of
the estimated future cash flows, discounted at the asset’s original effective interest
rate. Losses are recognised in profit or loss and reflected in an allowance account
against loans and receivables or held-to-maturity investment securities. Interest on
the impaired asset continues to be recognised. When the Group considers that there
are no realistic prospects of recovery of the asset, the relevant amounts are written
off. If the amount of impairment loss subsequently decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised,
then the previously recognised impairment loss is reversed through profit or loss.
Associates
An impairment loss in respect of an associate is measured by comparing the
recoverable amount of the investment with its carrying amount in accordance with
note 3.8(ii). An impairment loss is recognised in profit or loss. An impairment loss is
reversed if there has been a favourable change in the estimates used to determine
the recoverable amount.
NOTES TO THE
FINANCIAL STATEMENTS
Year ended 30 June 2015
