Annual Report 2015
FINANCIAL SECTION
121
3 PRINCIPAL ACCOUNTING POLICIES
(continued)
(j) Impairment of financial assets
(continued)
(i) Assets carried at amortised cost
(continued)
The Group first assesses whether objective evidence of impairment exists.
The amount of the loss is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rate. The asset’s carrying amount of the asset
is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or
held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment
loss is the current effective interest rate determined under the contract. As a practical expedient, the
Group may measure impairment on the basis of an instrument’s fair value using an observable market
price.
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 (such as an improvement in the
debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the
consolidated income statement.
(ii) Assets classified as available for sale
The Group assesses at the end of each reporting period whether there is objective evidence that
a financial asset or a group of financial assets is impaired. For debt securities, the Group uses the
criteria refer to (i) above. In the case of equity investments classified as available for sale, a significant
or prolonged decline in the fair value of the security below its cost is also evidence that the assets
are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss –
measured as the difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in the consolidated income statement – is removed
from equity and recognised in the consolidated income statement. Impairment losses recognised in the
consolidated income statement on equity instruments are not reversed through the consolidated income
statement. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale
increases and the increase can be objectively related to an event occurring after the impairment loss was
recognised in consolidated income statement, the impairment loss is reversed through the consolidated
income statement.
(k) Properties for/under development
Properties for/under development comprise leasehold land and land use rights, development expenditure
and borrowing costs capitalised, and are carried at the lower of cost and net realisable value. Properties
under development included in the current assets are expected to be realised in, or is intended for sale in the
Group’s normal operating cycle.
(l) Properties held for sale
Properties held for sale are initially measured at the carrying amount of the property at the date of
reclassification from properties under development. Subsequently, properties held for sale are carried at the
lower of cost and net realisable value. Net realisable value is determined by reference to management estimates
based on prevailing market conditions.
