FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 124 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 28. FINANCIAL INSTRUMENTS (CONT’D) (a) Financial Risk Management Policies (Cont’d) Credit risk (Cont’d) (iii) Assessment of impairment losses (Cont’d) • Fixed deposits with licensed banks, cash and bank balances The Group and the Company consider the licensed banks have low credit risks. In addition, some of the bank balances are insured by Government agencies. Therefore, the Group and the Company are of the view that the loss allowance is immaterial and hence, it is not provided for. • Amount owing by subsidiaries The Company applies the 3-stage general approach to measuring expected credit losses for amount owing by subsidiaries. Inputs, Assumptions and Techniques used for Estimating Impairment Losses The Company measures the expected credit losses on an individual basis, which is aligned with its credit risk management practices on the inter-company balances. The Company considers loans and advances to subsidiaries have low credit risks. The Company assumes that there is a signi cant increase in credit risk when a subsidiary’s nancial position deteriorates signi cantly. As the Company is able to determine the timing of payments of the loans and advances when they are payable, the Company considers the loans and advances to be in default when the subsidiaries are not able to pay when demanded. For loans and advances that are repayable on demand, impairment loss is assessed based on the assumption that repayment of the outstanding balances is demanded at the reporting date. If the subsidiary does not have suf cient highly liquid resources when the loans and advances are demanded, the Company will consider the expected manner of recovery to measure the impairment loss; the recovery manner could be either through ‘repayable over time’ or a re sale of less liquid assets by the subsidiary. For loans and advances that are not repayable on demand, impairment loss is measured using techniques that are similar for estimating the impairment losses of other receivables as disclosed above. There are no signi cant changes in the estimation techniques and assumptions as compared to the previous nancial year. Allowance for Impairment Losses Gross Lifetime Loss Carrying Amount Allowance Amount The Company RM RM RM 2024 Low credit risk 5,294,733 (2,989,079) 2,305,654 2023 Low credit risk 4,789,079 (2,989,079) 1,800,000 The movements in the loss allowances are disclosed in Note 18 to the nancial statements.
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