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Frontken Corporation Berhad (651020-T)
ANNUAL REPORT
2016
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Impairment (Cont’d)
(i)
Impairment of Financial Assets (Cont’d)
An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is
recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured
as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less
any impairment loss previously recognised in the fair value reserve. In addition, the cumulative loss recognised
in other comprehensive income and accumulated in equity under fair value reserve, is reclassified from equity to
profit or loss.
With the exception of available-for-sale equity instruments, 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, the previously recognised impairment loss is reversed through profit or loss to the extent that the
carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments,
impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair
value subsequent to an impairment loss made is recognised in other comprehensive income.
(ii) Impairment of Non-Financial assets
The carrying values of assets, other than those to which MFRS 136 - Impairment of Assets does not apply,
are reviewed at the end of each reporting period for impairment when an annual impairment assessment is
compulsory or there is an indication that the assets might be impaired. Impairment is measured by comparing
the carrying values of the assets with their recoverable amounts. When the carrying amount of an asset exceeds
its recoverable amount, the asset is written down to its recoverable amount and an impairment loss shall be
recognised. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their
value‑in‑use, which is measured by reference to discounted future cash flow using a pre-tax discount rate. Where
it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
An impairment loss is recognised in profit or loss immediately.
In respect of assets other than goodwill, when there is a change in the estimates used to determine the recoverable
amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous
impairment loss and is recognised to the extent of the carrying amount of the asset that would have been
determined (net of amortisation and depreciation) had no impairment loss been recognised.
Finance Leases
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental
to ownership. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value
and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset. The corresponding liability is included in the statement
of financial position as hire purchase payables.
Each lease and hire purchase payment is allocated between the liability and finance charges so as to achieve a constant
rate on the finance balance outstanding. The corresponding outstanding obligations due under the finance lease and
hire purchase after deducting finance charges are included as liabilities in the financial statements.
Notes To The Financial Statements
(cont’d)