3.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
3.7
Financial Instruments (cont'd)
3.7.6
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement
of financial position if, and only if, there is currently a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis, or to realise the assets
and settle the liabilities simultaneously.
3.8
Impairment of financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss) are
assessed at the end of each reporting period whether there is any objective evidence of impairment as
a result of one or more events having an impact on the estimated future cash flows of the asset. Losses
expected as a result of future events, no matter how likely, are not recognised. For an investment in
an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective
evidence of impairment.
An impairment loss in respect of loans and receivables and held-to-maturity investments 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 asset’s original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and
is measured as the difference between the asset’s acquisition cost (net of any principal repayment
and amortisation) and the asset’s current fair value, less any impairment loss previously recognised.
Where a decline in the fair value of an available-for-sale financial asset has been recognised in other
comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity
to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in
profit or loss and is measured as the difference between the financial asset’s carrying amount and
the present value of estimated future cash flows discounted at the current market rate of return for a
similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as
available-for-sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in profit or loss,
the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what
the carrying amount would have been had the impairment not been recognised at the date the
impairment is reversed. The amount of the reversal is recognised in profit or loss.
3.9
Cash and cash equivalents
Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term
and highly liquid investments that are readily convertible to known amount of cash and which are
subject to an insignificant risk of changes in value, against which bank overdraft balances, if any, are
deducted.
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2014 (CONT’D)
•
Pentamaster Corporation Berhad
(572307-U)
Annual Report 2014
55
