Page 137 - SC Annual Report 2018 (ENG)

Securities
Commission
Malaysia
ANNUAL
REPORT
2018

The gross carrying amount of a financial asset is written off (either partially or full) to
the extent that there is no realistic prospect of recovery. This is generally the case when
the SC determines that the debtor does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write-off. However,
financial assets that are written off could still be subject to enforcement activities in order
to comply with the SC’s procedures for recovery of amounts due.

Previous financial year

All financial assets were assessed at each reporting date whether there was any objective
evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no
matter how likely, were not recognised.

An impairment loss in respect of loans and receivables and held-to-maturity investments
was recognised in profit or loss and was measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at the
asset’s original effective interest rate. The carrying amount of the asset was reduced
through the use of an allowance account.

If, in a subsequent period, the fair value of the financial asset increased and the increase
could be objectively related to an event occurring after the impairment loss was
recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s
carrying amount did not exceed what the carrying amount would have been had the
impairment not been recognised at the date the impairment was reversed. The amount of
the reversal was recognised in profit or loss.
(ii) other assets

The carrying amounts of other assets are reviewed at the end of each reporting period
to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or cash-generating units. The recoverable
amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs of disposal. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or cash-
generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-
generating unit exceeds its estimated recoverable amount. Impairment losses are
recognised in profit or loss.
Impairment losses recognised in prior periods are assessed at the end of each reporting
period for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the
recoverable amount since the last impairment loss was recognised. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised. Reversals of impairment losses are credited to profit
or loss in the financial year in which the reversals are recognised.

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