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Notes to the financial statements
31 December 2012
(continued)
Annual Report 2012 KPJ Healthcare Berhad
2. Summary of significant accounting policies (continued)
2.14 Financial assets (continued)
A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset
in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been
recognised in other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by
regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the
trade date, the date that the Group and the Company commit to purchase or sell the asset.
2.15 Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company
consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
For certain categories of financial assets, such as trade receivables, receivables that are assessed not to be impaired individually are subsequently
assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables
could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit
or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables,
where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against
the allowance account.
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 profit or loss.
(b) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties 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 classified as available-for-sale
financial assets are impaired.
If an available-for-sale financial 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 profit or loss, is transferred from equity to profit or
loss.
Impairment losses on available-for-sale equity investments are not reversed in profit 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 profit 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 profit or loss.