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Baker Technology LimitedAnnual Report 2014
2.
Summaryof significant accountingpolicies (cont’d)
2.11
Impairment of financial assets (cont’d)
(a)
Financial assets carried at amortised cost (cont’d)
When theasset becomes uncollectible, the carryingamount of impairedfinancial assets is reduced
directlyor ifanamountwascharged to theallowanceaccount, theamountscharged to theallowance
account arewrittenoff against the carrying valueof thefinancial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has
been incurred, the Group considers factors such as the probability of insolvency or significant
financial difficultiesof thedebtor anddefault or significant delay inpayments.
If, inasubsequentperiod, theamountof the impairment lossdecreasesandthedecreasecanberelated
objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed to the extent that the carrying value of the asset does not exceed its
amortisedcostat the reversaldate. Theamountof reversal is recognised in theprofitor loss.
(b)
Financial assets carried at cost
If there isobjectiveevidence (suchassignificantadversechanges in thebusinessenvironmentwhere
the issuer operates, probabilityof insolvencyor significant financial difficultiesof the issuer) that an
impairment loss on a financial asset carried at cost has been incurred, the amount of the loss is
measuredas thedifferencebetween theasset’scarryingamountand thepresent valueofestimated
future cash flows discounted at the current market rate of return for a similar financial asset. Such
impairment losses arenot reversed in subsequent periods.
(c)
Available-for-salefinancial assets
In the case of equity investments classified as available-for-sale, objective evidence of impairment
include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant
changeswithanadverseeffect thathave takenplace in the technological,market,economicor legal
environment in which the issuer operates, and indicates that the cost of the investment in equity
instrumentmay not be recovered; and (iii) a significant or prolongeddecline in the fair valueof the
investmentbelow itscosts. ‘Significant’ is tobeevaluatedagainst theoriginal costof the investment
and ‘prolonged’ against theperiod inwhich the fair valuehasbeenbelow itsoriginal cost.
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31December 2014
