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The impairment of nancial assets
IFRS 9 requires the recognition of impairment loss on financial assets using the expected credit loss model. The expected
credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at
FVTOCI, certain lease receivables, contract assets within the scope of IFRS 15 "Revenue from Contracts with Customers,"
and certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected
credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss
allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly
since initial recognition. However, a loss allowance for full lifetime expected credit losses is required for certain trade
receivables that do not constitute a financing transaction.
For purchased or originated credit-impaired financial assets, the Corporation takes into account the expected credit losses on initial
recognition, and these losses should be discounted using the credit-adjusted effective interest rate. Subsequently, any changes from
the initial expected credit losses are recognized as a loss allowance, with the gain or loss recognized in profit or loss.
Hedge accounting
The main changes in hedge accounting under IFRS 9 "Financial Instruments" amended the application requirements for
hedge accounting to better reflect an entity's risk management activities. Compared with IAS 39, the main changes include
(1) broadening the range of risk components eligible for hedge accounting of non-financial items; (2) changing the way
hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) for determining the effectiveness
of a hedging relationship, replacing retrospective effectiveness testing with a testing of economic relationship between the
hedging instrument and the hedged item.
2) Amendment to IAS 36 "Recoverable Amount Disclosures for Non- nancial Assets"
In issuing IFRS 13 "Fair Value Measurement", the IASB made consequential amendment to the disclosure requirements in
IAS 36 "Impairment of Assets", introducing a requirement to disclose in every reporting period the recoverable amount of
an asset or each cash-generating unit only when an impairment loss has been recognized or reversed during the reporting
period. Furthermore, the Corporation is required to disclose the discount rate used in measurements of the recoverable
amount based on fair value less costs of disposal measured using a present value technique.
3) Amendments to IAS 16 and IAS 38 "Clari cation of Acceptable Methods of Depreciation and Amortization"
The Corporation should use appropriate depreciation and amortization method to reflect the pattern in which the future
economic benefits of the property, plant and equipment and intangible asset are expected to be consumed by the entity.
The amended IAS 16 "Property, Plant and Equipment"requires that a depreciation method that is based on revenue that is
generated by an activity that includes the use of an asset is not appropriate. The amended standard does not provide any
exception from this requirement.
The amended IAS 38 "Intangible Assets"requires that there is a rebuttable presumption that an amortization method that
is based on revenue that is generated by an activity that includes the use of an intangible asset is not appropriate. This
presumption can be overcome only in the following limited circumstances:
a. In which the intangible asset is expressed as a measure of revenue (for example, the contract that specifies the entity's
use of the intangible asset will expire upon achievement of a revenue threshold); or
b. When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.
An entity should apply the aforementioned amendments prospectively for annual periods beginning on or after the effective date.
4) IFRS 16 "Leases"
IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.
Under IFRS 16, if the Corporation is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on
the consolidated balance sheets except for low-value and short-term leases. The Corporation may elect to apply the
accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the
consolidated statements of comprehensive income, the Corporation should present the depreciation expense charged on
the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective
interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability
are classified within financing activities; cash payments for interest portion are classified within operating activities.
The application of IFRS 16 is not expected to have a material impact on the accounting of the Corporation as lessor.
When IFRS 16 becomes effective, the Corporation may elect to apply this Standard either retrospectively to each prior
reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized
at the date of initial application.
Except for the above impact, as of the date the financial statements were authorized for issue, the Corporation is
continuously assessing the possible impact that the application of other standards and interpretations will have on the
Corporation's financial position and financial performance, and will disclose the relevant impact when the assessment is
completed.
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