AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 129 Qualitative criteria: The debtor meets unlikeliness to pay criteria, which indicates the debtor is in signiicant inancial diiculty. The Group and the Fund consider the following instances: • the debtor is in breach of inancial covenants • concessions have been made by the lender relating to the debtor’s inancial diiculty • it is becoming probable that the debtor will enter bankruptcy or other inancial reorganisation • the debtor is insolvent Financial instruments that are credit-impaired are assessed on individual basis. (iv) Groupings of instruments for ECL measured on collective basis (a) Collective assessment To measure ECL, trade receivables from rental receivable from lessees have been grouped based on shared credit risk characteristics, geographical location and the days past due. (b) Individual assessment Trade receivables which are in default or credit-impaired are assessed individually, other receivables and amount owing by related companies in the Fund’s separate inancial statements are assessed on individual basis for ECL measurement, as credit risk information is obtained andmonitored based on each other receivables and amount owing by related companies. (v) Write of (a) Trade receivables Trade receivables are written of when there is no reasonable expectation of recovery. Impairment losses on trade receivables are presented as net impairment losses within proit before taxes. Subsequent recoveries of amounts previously written of are credited against the same line item. (b) Other receivables The Group and the Fund write of inancial assets, in whole or in part, when it has exhausted all practical recovery eforts and has concluded there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is based on unavailability of debtor’s sources of income or assets to generate suicient future cash lows to repay the amount. The Group and the Fund may write-of inancial assets that are still subject to enforcement activity. Subsequent recoveries of amounts previously written of will result in impairment gains. Financial liabilities Financial liabilities are recognised on the statements of inancial position when, and only when, the Group and the Fund become a party to the contractual provisions of the inancial instrument. Financial liabilities comprise other payables, Islamic inancing, amounts due to subsidiaries and related companies. Financial liabilities are recognised initially at fair value, plus, in the case of inancial liabilities other than derivatives, directly attributable transactions costs. As for amount owing to a subsidiary of the Fund, they are recognised initially at fair value. If there are any diference between cash disbursed and fair value on initial recognition, the diference would be accounted as additional investment in the subsidiary as it relects the substance of the transaction.