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AEMULUS HOLDINGS BERHAD
TA R G E T I N G T H E B U L L’ S E Y E
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
3.6 Financial Instruments (Cont’d)
3.6.4 Derecognition
A financial asset or part of it is derecognised, when and only when the contractual rights to the cash flows
from the financial asset expire or the financial asset is transferred to another party without retaining control
or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference
between the carrying amount and the sum of the consideration received (including any new asset obtained
less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is
recognised in the profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the
contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference
between the carrying amount of the financial liability extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit
or loss.
3.7 Impairment of Financial Assets
All financial assets (except for financial assets categorised as fair value through profit or loss and investment in
subsidiary) are assessed at the end of each reporting period whether there is any objective evidence of impairment
as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected
as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a
significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or
loss and is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured
as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the
asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an
available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other
comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss
and is measured as the difference between the financial asset’s carrying amount and the present value of estimated
future cash flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-
sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related
to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to
the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the
impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised
in profit or loss.
3.8 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost of raw materials is determined on the weighted average basis.
Cost of finished goods includes direct materials and direct labour.
Net realisable value represents the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale.
NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
– 30 SEPTEMBER 2016