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Competition Commission of Singapore 75
Annual Report 2013/14
Notes to Financial Statements
31 March 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial
assets are impaired where there is objective evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the estimated future cash flows of the investment have
been impacted.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of receivables where the carrying amount is reduced through the use of an allowance
account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the
carrying amount of the allowance account are recognised in income or expenditure.
Derecognition of financial assets
The Commission derecognises a financial asset only when the contractual rights to the cash flows from
the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership
of the asset to another entity. If the Commission neither transfers nor retains substantially all the risks
and rewards of ownership and continues to control the transferred asset, the Commission recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Commission
retains substantially all the risks and rewards of ownership of a transferred financial asset, the Commission
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Commission are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial liability and an
equity instrument.
Annual Report 2013/14
Notes to Financial Statements
31 March 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial
assets are impaired where there is objective evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the estimated future cash flows of the investment have
been impacted.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of receivables where the carrying amount is reduced through the use of an allowance
account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the
carrying amount of the allowance account are recognised in income or expenditure.
Derecognition of financial assets
The Commission derecognises a financial asset only when the contractual rights to the cash flows from
the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership
of the asset to another entity. If the Commission neither transfers nor retains substantially all the risks
and rewards of ownership and continues to control the transferred asset, the Commission recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Commission
retains substantially all the risks and rewards of ownership of a transferred financial asset, the Commission
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Commission are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial liability and an
equity instrument.
