2013 — Page 63

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Hong Kong Ferry (Holdings) Company Limited

Annual Report 2013

61

Notes to the Accounts (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

(j) Impairment of assets

(i) Impairment of investments in debt and equity securities and other receivables.

Investments in debt and equity securities and other current and non-current receivables that are stated

at cost or amortised cost or are classified as available-for-sale securities are reviewed at each balance

sheet date to determine whether there is objective evidence of impairment. Objective evidence of

impairment includes observable data that comes to the attention of the Group about one or more of

the following loss events:

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.

If any such evidence exists, any impairment loss is determined and recognised as follows:

For investment in associates accounted for under the equity method in the consolidated accounts (see note 1(e)), the impairment loss is measured by comparing the recoverable amount of the investment with its carrying amount in accordance with note 1(j)(ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the

recoverable amount in accordance with note 1(j)(ii).

For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities carried at cost are not reversed.