AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 126 to reclassify inancial assets that would meet the deinition of loans and receivables out of the held for trading or AFS categories if the Group and the Fund have the intention and ability to hold these inancial assets for the foreseeable future or until maturity at the date of reclassiication. Reclassiications are made at fair value as of the reclassiication date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassiication date are subsequently made. Efective proit rates for inancial assets reclassiied to loans and receivables and held-to-maturity categories are determined at the reclassiication date. Further increases in estimates of cash lows adjust the efective proit rates prospectively. (iii) Subsequent measurement Subsequent to the initial recognition, loans and receivables and held-to-maturity investments were carried at amortised cost using the efective proit method. AFS inancial assets and inancial assets at FVTPL were subsequently carried at fair value. Changes in the fair values of inancial assets at FVTPL, including the efects of currency translation, proit income and dividend income are recognised in proit or loss in the period in which the changes arise. Changes in the fair value of AFS inancial assets are recognised in other comprehensive income, except for impairment losses. Impairment of inancial assets Accounting policies applied from 1 January 2018 Impairment for debt instruments The Group and the Fund assess at the end of each reporting period whether there is any objective evidence that a inancial asset is impaired. (i) Impairment for debt instruments The Group and the Fund assess on a forward looking basis the ECL associated with its debt instruments carried at amortised cost and at FVTOCI and inancial guarantee contracts issued. The impairment methodology applied depends on whether there has been a signiicant increase in credit risk. The Group and the Fund have three types of inancial instruments that are subject to the ECL model: • Trade receivables • Other receivables • Amount owing by related companies While cash and cash equivalents are also subject to the impairment requirements of MFRS 9, the identiied impairment loss was immaterial. ECL represent a probability-weighted estimate of the diference between the present value of contractual cash lows and the present value of cash lows the Group and the Fund expect to receive, over the remaining life of the inancial instrument.