1
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(j)
Credit losses and impairment of assets (Continued)
() Credit losses from financial instruments, contract assets and lease receivables
(Continued)
(ii)
(B) Policy applicable prior to 1 January 2018 (Continued)
For available-for-sale securities, the cumulative loss that has been recognised in the securities revaluation reserve was reclassified to profit or loss. The amount of the cumulative loss that was recognised in profit or loss was the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss on that asset previously recognised in profit or loss.
Impairment losses recognised in profit or loss in respect of available-for-sale equity securities were not reversed through profit or loss. Any subsequent increase in the fair value of such assets was recognised in other comprehensive income.
Impairment losses in respect of available-for-sale debt securities were reversed if the subsequent increase in fair value can be objectively related to an event occurring after the impairment loss was recognised. Reversals of impairment losses in such circumstances were recognised in profit or loss.
Credit losses from financial guarantees issued
Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the "holder") for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt
instrument.
Financial guarantees issued are initially recognised within "trade and other payables” at fair value, which is determined by reference to fees charged in an arm's length transaction for similar services, when such information is obtainable, or to interest rate differentials, by comparing the actual rates charged by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees not been available, where reliable estimates of such information can be made. Where consideration is received or receivable for the issuance of the guarantee, the consideration is recognised in accordance with the Group's policies applicable to that category of asset. Where no such consideration is received or receivable, an immediate expense is recognised in profit or loss.
Subsequent to initial recognition, the amount initially recognised as deferred income is amortised in profit or loss over the term of the guarantee as income from financial guarantees issued.
Hong Kong Ferry (Holdings) Company Limited Annual Report 2018
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