NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
1 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(j)
Credit losses and impairment of assets (Continued)
(i) Credit losses from financial instruments, contract assets and lease receivables
(Continued)
(A)
Policy applicable from 1 January 2018 (Continued)
Write-off policy
The gross carrying amount of a financial asset, lease receivable or contract asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-
off.
Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.
(B)
Policy applicable prior to 1 January 2018
Prior to 1 January 2018, an “incurred loss" model was used to measure impairment losses on financial assets not classified as at FVPL (e.g. trade and other receivables, available-for-sale investments and held-to-maturity debt securities). Under the "incurred loss" model, an impairment loss was recognised only when there was objective evidence of impairment. Objective evidence of impairment included:
significant financial difficulty of the debtor;
a breach of contract, such as a default or delinquency in interest or principal payments;
it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and
a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
Hong Kong Ferry (Holdings) Company Limited
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Annual Report 2018
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