NOTES TO FINANCIAL STATEMENTS
30 June 2015
Karin Technology Holdings Limited
Annual Report 2015
68
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
IMPAIRMENT OF FINANCIAL ASSETS (continued)
Financial assets carried at amortised cost
(continued)
The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised
in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using
the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Loans and receivables together with any associated allowance are written off when there is no realistic prospect
of future recovery.
If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an
event occurring after the impairment was recognised, the previously recognised impairment loss is increased or
reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to “Other
expenses, net” in profit or loss.
FINANCIAL LIABILITIES
Initial recognition and measurement
Financial liabilities are all classified, at initial recognition, as loans and borrowings. All financial liabilities are
recognised initially at fair value and net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables and interest-bearing bank and other borrowings.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost,
using the effective interest rate method unless the effect of discounting would be immaterial, in which case they
are stated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well
as through the effective interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance
costs in profit or loss.
DERECOGNITION OF FINANCIAL LIABILITIES
A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognised in profit or loss.
OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
