NOTES TO THE
FINANCIAL STATEMENTS
Year ended 31 December 2014
3
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.4 Financial instruments (cont’d)
Other non-trading derivatives
When a derivative financial instrument is not designated in a hedge relationship that qualifies for hedge accounting,
all changes in its fair value are recognised immediately in the Statement of Total Return.
3.5 Impairment
Non-derivative financial assets (including receivables)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine
whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates
that a loss event(s) has occurred after the initial recognition of the asset, and that the loss event(s) has a negative
effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring
of an amount due to the Group on terms that the Group would not consider otherwise, or indications that a debtor
or issuer will enter bankruptcy, the disappearance of an active market for a security.
The Group considers evidence of impairment for receivables at a specific asset level. All individually significant
receivables are assessed for specific impairment.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s
original effective interest rate. Losses are recognised in the Statement of Total Return and reflected in an allowance
account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through the Statement of Total Return.
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than investment property, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or cash-generating unit. For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that generates cash inflows from continuing
use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit,
or CGU”).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the Statement of Total Return. Impairment losses recognised in
respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then
to reduce the carrying amounts of the other assets in the unit (group of units) on a
pro rata
basis.
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PA R K WAY L I F E R E I T
