Cordlife Group Limited
Annual Report 2016
69
Notes to
The Financial Statements
for the financial year ended 30 June 2016
2.
Summary of significant accounting policies (cont’d)
2.13 Financial instruments (cont’d)
(b)
Financial liabilities (cont’d)
Subsequent measurement
After initial recognition, financial liabilities other than derivatives, are measured at amortised cost using
the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are
de-recognised, and through the amortisation process.
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a de-recognition of the original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is recognised in profit or loss.
(c)
Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount is presented in the statements
of financial position, when and only when, there is a currently enforceable legal right to set off the
recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle
the liabilities simultaneously.
2.14
Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is
impaired.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of
impairment exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Group determines that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that
are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are
not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been
incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. If
a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The
impairment loss is recognised in profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or
if an amount was charged to the allowance account, the amounts charged to the allowance account are written
off against the carrying value of the financial 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 difficulties of the
debtor and default or significant delay in payments.
