Page 149 - KPJ_2011

2. Summary of significant accounting policies (continued)
2.15 Impairment of financial assets (continued)
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the
reversal date. The amount of reversal is recognised in promt or loss.
(b) Available-for-sale financial assets
Signimcant or prolonged decline in fair value below cost, signimcant mnancial difmculties of the issuer or
obligor, and the disappearance of an active trading market are considerations to determine whether there is
objective evidence that investment securities classimed as available-for-sale mnancial assets are impaired.
If an available-for-sale mnancial asset is impaired, an amount comprising the difference between its
cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss
previously recognised in promt or loss, is transferred from equity to promt or loss.
Impairment losses on available-for-sale equity investments are not reversed in promt or loss in the
subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other
comprehensive income. For available-for-sale debt investments, impairment losses are subsequently
reversed in promt or loss if an increase in the fair value of the investment can be objectively related to an
event occurring after the recognition of the impairment loss in promt or loss.
2.16 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 amount of cash and which are subject to an insignimcant risk of
changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.
2.17 Inventories
Inventories are stated at the lower of cost (determined on the weighted average basis) and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale.
2.18 Financial liabilities
Financial liabilities are classimed according to the substance of the contractual arrangements entered into and
the demnitions of a mnancial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statement of mnancial position when,
and only when, the Group and the Company become a party to the contractual provisions of the mnancial
instrument. Financial liabilities are classimed as either mnancial liabilities at fair value through promt or loss or
other mnancial liabilities.
(a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through promt or loss include mnancial liabilities held for trading and mnancial
liabilities designated upon initial recognition at fair value through promt or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company that
do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and
subsequently stated at fair value, with any resultant gains or losses recognised in promt or loss. Net gains
or losses on derivatives include exchange differences.
The Group and the Company have not designated any mnancial liabilities at fair value through promt or loss.
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2011 (continued)
ANNUAL REPORT 2011 144