AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 127 The measurement of ECL relects: • an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; • the time value of money; and • reasonable and supportable information that is available without undue cost or efort at the reporting date about past events, current conditions and forecasts of future economic conditions. (a) General 3-stage approach for other receivables and amount owing by related companies At the end of each reporting period, the Group and the Fund measure ECL through a loss allowance at an amount equal to the 12-month ECL if credit risk on a inancial instrument or a group of inancial instruments has not increased signiicantly since initial recognition. For all other inancial instruments, a loss allowance at an amount equal to lifetime ECL is required. Note 27 sets out the measurement details of ECL. (b) Simpliied approach for trade receivables The Group and the Fund apply the MFRS 9 simpliied approach to measure ECL which uses a lifetime ECL for all trade receivables. Note 27 sets out the measurement details of ECL. Accounting policies applied until 31 December 2017 In the prior year, the Group and the Fund assessed impairment of inancial assets based on the incurred loss model. Assets carried at amortised cost The Group and the Fund assess at the end of the reporting period whether there is objective evidence that a inancial asset or group of inancial assets is impaired. A inancial asset or a group of inancial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash lows of the inancial asset or group of inancial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing signiicant inancial diiculty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other inancial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash lows, such as changes in arrears or economic conditions that correlate with defaults. The amount of the loss is measured as the diference between the asset’s carrying amount and the present value of estimated future cash lows (excluding future credit losses that have not been incurred) discounted at the inancial asset’s original efective proit rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in proit or loss. If ‘loans and receivables’ or a ‘held-to-maturity investment’ has a variable interest rate, the discount rate for measuring any impairment loss is the current efective proit rate determined under the contract. As a practical expedient, the Group and the Fund 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 proit or loss.