c)Loans and receivables
Loans and receivables (including trade receivables, cash and cash equivalents) are measured at amortized
cost using the effective interest method, less any impairment. However, short-term receivables and
payables with no stated interest rate may be measured at invoice amounts if the effect of discounting is
immaterial.
2)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 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 affected.
For financial assets carried at amortized cost, such as trade receivables, assets are assessed for impairment
collectively even if they are assessed as not impaired individually. Objective evidence of impairment for
a portfolio of receivables could include the Corporation’s past experience of collecting payments and
impairment as well as observable changes in national or local economic conditions that correlate with default
on receivables.
Impairment loss recognized on financial assets carried at amortized cost is 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 the impairment loss decreases and the decrease can be related objectively to an event
occurring after the recognition of impairment, the previously recognized impairment loss is reversed through
profit or loss to the extent that the carrying amount of the investment on the date the impairment is reversed
does not exceed what the amortized cost would have been had the impairment not been recognized.
For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security
below its cost is considered an objective evidence of impairment.
When a decline in the fair value of an available-for-sale financial asset has been recognized directly in
other comprehensive income (OCI) and there is objective evidence of asset impairment, the cumulative loss
recognized directly in OCI is transferred to profit or loss.
On available-for-sale equity securities, impairment loss previously recognized in profit or loss is not
reversed through profit or loss. Any increase in fair value after an impairment loss is recognized in other
comprehensive income. On available-for-sale debt securities, the impairment loss is reversed through profit
or loss if an increase in the fair value of the investment can be objectively related to an event occurring after
the recognition of the impairment loss.
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. This impairment loss will not be reversed in
subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets, except trade receivables, where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes
in the carrying amount of the allowance account are recognized in profit or loss, except for uncollectible trade
receivables that are written off against the allowance account.
│
49
│
Financial Statements
