AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 158 (b) Impairment of inancial assets Until 31 December 2017, the Fund assessed the impairment of loans and receivables based on the incurred impairment loss model. Note 3.6 sets out the details of accounting policies for impairment of inancial assets under MFRS 139. From 1 January 2018, the Group and the Fund apply the expected credit loss (“ECL”) model to determine impairment on investment in debt instruments that are measured at amortised cost and at FVTOCI. The new accounting policies for impairment under MFRS 9 are set out in Note (i) Trade receivables and contract assets that do not contain signiicant inancing components For all trade receivables that do not contain signiicant inancing components, the Group and the Fund apply the MFRS 9 simpliied approach which is to measure the loss allowance at an amount equal to lifetime ECL at initial recognition and throughout its life. No additional loss allowance is recognised on these trade receivables upon application of MFRS 9 after the Manager had considered the days past due, historical default experience and the future prospects of the industries in which the trade receivables operate. (ii) Other receivables Other receivables are classiied as amortised cost in the Group’s and the Fund’s inancial statements because the Group’s and the Fund’s business model is to hold and collect the contractual cash lows and those cash lows represent SPPI. The Group and the Fund applied the general 3-stage approach when determining ECL for the other receivables. The Manager concludes that no additional loss allowance is recognised on these other receivables upon application of MFRS 9 after considering the days past due, historical default experience and the future prospects of the industries in which the receivable operates. (iii) Amount owing by related companies Amount owing by related companies that are repayable on demand and non-proit bearing are classiied as amortised cost in the Fund’s separate inancial statements because the Fund’s businessmodel is to hold and collect the contractual cash lows and those cash lows represent SPPI. The Fund applied the general 3-stage approach when determining ECL for these amount owing by related parties. No additional loss allowance is recognised on these amount owing by related companies upon application of MFRS 9 as all strategies indicate that the Fund could fully recover the outstanding balance of the amount owing by related companies.