IREIT Global.
annual report 2014
For the reporting period from 1 November 2013 (date of constitution) to 31 December 2014
Notes to the
Financial Statements
2.
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
(e) Financial instruments
(Continued)
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for
indicators of impairment at the end of each reporting period. Financial assets are considered
to be impaired when there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the estimated future cash flows
of the investment have been impacted.
For all other financial assets, objective evidence of impairment could include:
•
Significant financial difficulty of the issuer or counterparty; or
•
Default or delinquency in interest or principal payments; or
•
It becoming probable that the borrower will enter bankruptcy or financial
re-organisation.
For certain categories of financial assets, such as trade receivables, assets that are assessed
not to be impaired individually are, in addition, assessed for impairment on a collective basis.
Objective evidence of impairment for a portfolio of receivables could include the Group’s
past experience of collecting payments, an increase in the number of delayed payments in
the portfolio past the average credit period as well as observable changes in national or
local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment 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.
For financial assets that are carried at cost, the amount of the impairment loss is measured
as the difference between the asset’s carrying amount and the present value of the estimated
future cash flows discounted at the current market rate of return for a similar financial asset.
The carrying amount of the financial asset is reduced by the impairment loss directly for
all financial assets with the exception of trade receivables where the carrying amount is
reduced through the use of an allowance account. When a trade receivable is uncollectible,
it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited to the allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
