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SEE HUP SENG LIMITED
Annual Report 2012
51
Notes to the Financial Statements
31 DECEMBER 2012
2 Significant Accounting Policies (Continued)
(j) Financial Assets
The Group classifies its non-derivative financial assets in the following categories: loans and receivables,
and available-for-sale. The classification depends on the purpose for which the financial assets are
acquired. Management determines the classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They arise when the Group provides money, goods or services directly
to a debtor with no intention of trading the receivable. The Group’s loans and receivables comprise trade
and other receivables (other than prepayments), and cash and cash equivalents. Loans and receivables
are recognised initially at fair value plus any directly attributable transaction costs, and are subsequently
carried at amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or
impaired.
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any other category. They are presented as non-current assets unless management intends
to dispose of the assets within 12 months after the balance sheet date. Available-for-sale financial assets
are recognised initially at fair value plus any directly attributable transaction costs, and are subsequently
carried at fair value with gains and losses being recognised directly in equity until the investment is
derecognised or until the investment is determined to be impaired at which time the cumulative gain
or loss previously reported in equity is included in profit or loss. For investment in unquoted equity
instruments classified as financial assets available for sale is measured at cost as the fair value cannot
be measured reliably.
Impairment losses recognised in profit or loss for investments in equity instruments classified as available-
for-sale are not subsequently reversed through profit or loss.
(k) Trade and Other Receivables
Trade receivables and other receivables other than prepayments are initially recognised at fair value plus
transaction costs and subsequently carried at amortised cost using the effective interest method. They
are included in current assets, except those maturing later than 12 months after the balance sheet date
which are classified as non-current assets.
The Group assesses at each balance sheet date whether there is objective evidence that trade receivables
are impaired.
An allowance for impairment is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments are considered indicators that the receivable is
impaired. The amount of the allowance is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest rate. The amount
of allowance for impairment is recognised in profit or loss.