Page 54 - CPC 2018 Annual Report

52 CPC Corporation, Taiwan 2018
1. Financial assets
Financial assets are classified into the following categories: financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables.
(i) Financial assets at fair value through profit or loss
A financial asset is classified in this category if it is classified as held for trading or is designated as at fair value through profit or loss.
Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividend or interest earned on the financial asset.
(ii) Available for sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.
Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for- sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.
Dividends on available-for-sale equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established.
Available-for-sale equity investments that do not have a quoted market prices in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are presented in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in or other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.
(iii) 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, except for short-term receivables, which are measured at their original invoice amounts with no stated interest rate if the effect of discounting is immaterial.
Cash equivalents include time deposits with original maturities of within three months from the date of acquisition and are highly liquid, readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.
(iv) 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 affected.
Financial assets carried at amortized cost, such as trade receivables, are assessed for impairment collectively even if they had been assessed as not impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Company’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.