Frontken Corporation Berhad 200401012517 (651020-T) • A N N U A L R E P O R T 2 0 2 1 146 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 27. FINANCIAL INSTRUMENTS (CONT’D) (a) Financial Risk Management Policies (Cont’d) Credit Risk (Cont’d) (iii) Assessment of impairment losses At each reporting date, the Group assesses whether any of the financial assets at amortised cost are credit impaired. The gross carrying amounts of financial assets are written off when there is no reasonable expectation of recovery (i.e. the debtor does not have assets or sources of income to generate sufficient cash flows to repay the debt) despite the fact that they are still subject to enforcement activities. • Trade receivables The Group applies the simplified approach to measure expected credit losses which using a lifetime expected credit loss allowance for all trade receivables. To measure the expected credit losses, trade receivables (including related parties) have been grouped based on shared credit risk characteristics and the days past due. For certain large customers or customers with a high risk of default, the Group assesses the risk of loss of each customer individually based on their financial information, past trends of payments and external credit rating, where applicable. Also, the Group considers any trade receivables having financial difficulty or in default with significant balances outstanding for more than a year are deemed credit impaired and assesses for their risk of loss individually. The expected loss rates are based on the payment profiles of sales over a period of 12 months from the measurement date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle their debts. The information about the exposure to credit risk and the loss allowances calculated under MFRS 9 for trade receivables are summarised below:- Gross Individual Collective Carrying Amount Impairment Impairment Amount The Group RM RM RM RM 2021 Not past due 94,116,790 - - 94,116,790 Past due:- - less than 1 month 12,328,428 - - 12,328,428 - 1 to 9 months 8,838,442 - - 8,838,442 - over 9 months 1,668,513 (1,228,387) (123,885) 316,241 Trade receivables 116,952,173 (1,228,387) (123,885) 115,599,901
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