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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.
If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment loss was
recognised, the previously recognised impairment loss is reversed through profit or loss
to the extent the carrying amount of the financial assets at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment
not been recognised.
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.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the
Commission after deducting all of its liabilities. Equity instruments are recorded at the
proceeds received, net of significant direct issue costs.
Pursuant to the Finance Circular Minute (“FCM”) No. 26/2008 on Capital Management
Framework (“CMF”), equity injection from the Government is recorded as share capital.
Other financial liabilities
Trade and other payables and amount are initially measured at fair value, net of
transaction costs and are subsequently measured at amortised cost, using the effective
interest method except for short-term balances when the recognition of interest would be
immaterial.
Derecognition of financial liabilities
The Commission derecognises financial liabilities when, and only when, the Commission’s
obligations are discharged, cancelled or they expire.
d.
LEASES - Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other leases are
classified as operating leases.
The Commission as lessee
Rentals payable under operating leases are charged to income or expenditure on a
straightline basis over the term of the relevant lease unless another systematic basis is
more representative of the time pattern in which economic benefits from the leased asset
are consumed. Contingent rentals arising under operating leases are recognised as an
expense in the period in which they are incurred.
NOTES TO FINANCIAL STATEMENTS
31 March 2017
ANNUAL REPORT 2016
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