Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2023 149 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 28. FINANCIAL INSTRUMENTS (CONT’D) (a) Financial Risk Management Policies (Cont’d) Credit Risk (Cont’d) (iii) Assessment of impairment losses (Cont’d) • Amount owing by subsidiaries (Cont’d) There are no significant changes in the estimation techniques and assumptions as compared to the previous financial year. Allowance for Impairment Losses Lifetime Gross Loss Carrying Amount Allowance Amount The Company RM RM RM 2023 Low credit risk 4,789,079 (2,989,079) 1,800,000 2022 Low credit risk 4,339,079 (2,989,079) 1,350,000 The movements in the loss allowances are disclosed in Note 18 to the financial statements. • Financial Guarantee Contracts Corporate guarantees for borrowing facilities granted to subsidiaries are financial guarantee contract. Inputs, Assumptions and Techniques used for Estimating Impairment Losses The Company closely monitors the subsidiaries’ financial strength to reduce the risk of loss. The Company considers there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. A financial guarantee contract is credit impaired when: - The subsidiary is unlikely to repay its obligation to the bank in full; or - The subsidiary is having a deficit in equity and is continuously loss making. The Company determines the probability of default of the guaranteed amounts individually using internal information available. Allowance for Impairment Losses All of the financial guarantee contracts are considered to be performing, have low risks of default and historically there were no instances where these financial guarantee contracts were called upon by the parties of which the financial guarantee contracts were issued to. Accordingly, no loss allowances were identified based on 12-month expected credit losses.
RkJQdWJsaXNoZXIy NDgzMzc=