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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
1
/ China Communications Services Corporation Limited
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Significant accounting policies
(continued)
(l) Impairment of assets
(continued)
(i)
Impairment of investments in debt and equity securities and other receivables
(continued)
If any such evidence exists, any impairment loss is determined and recognised as follows:
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For investment in associate recognised using the equity method (see note 2(c)(ii)), the
impairment loss is measured by comparing the recoverable amount of the investment
as a whole with its carry amount in accordance with note 2(l)(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 2(l)(ii).
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For unquoted equity securities and current receivables that are 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 are not reversed.
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For trade and other current receivables and other financial assets carried at cost or
amortised cost, the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted
at the financial asset’s original effective interest rate (i.e. the effective interest rate
computed at initial recognition of these assets), where the effect of discounting is
material. This assessment is made collectively where these financial assets share similar
risk characteristics, such as similar past due status, and have not been individually
assessed as impaired. Future cash flows for financial assets which are assessed for
impairment collectively are based on historical loss experience for assets with credit risk
characteristics similar to the collective group.
If in a subsequent period the amount of an impairment loss decreases and the decrease
can be linked objectively to an event occurring after the impairment loss was recognised,
the impairment loss is reversed through the consolidated income statement. A reversal
of an impairment loss shall not result in the asset’s carrying amount exceeding that
which would have been determined had no impairment loss been recognised in prior
years.
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For available-for-sale securities, the cumulative loss that has been recognised in the
fair value reserve is reclassified to consolidate income statement. The amount of
the cumulative loss that is recognised in the consolidated income statement is 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
the consolidated income statement.
Impairment losses recognised in the consolidated income statement in respect of
available-for-sale equity securities are not reversed through the consolidated income
statement. Any subsequent increase in the fair value of such assets is recognised in
other comprehensive income.
Impairment losses in respect of available-for-sale debt securities are 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 are recognised in the consolidated income statement.