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LIPPO MALLS INDONESIA RETAIL TRUST ANNUAL REPORT 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Financial assets
Initial recognition, measurement and derecognition:
A financial asset is recognised on the statement of financial position when, and only when, the entity becomes a
party to the contractual provisions of the instrument. The initial recognition of financial assets is at fair value normally
represented by the transaction price. The transaction price for financial asset not classified at fair value through profit
or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through profit or loss
are expensed immediately. The transactions are recorded at the trade date.
Irrespective of the legal form of the transactions performed, financial assets are derecognised when they pass the
“substance over form” based on the derecognition test prescribed by FRS 39 relating to the transfer of risks and
rewards of ownership and the transfer of control. Financial assets and financial liabilities are offset and the net amount
is reported in the statement of financial position if there is currently a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Subsequent measurement:
Subsequent measurement based on the classification of the financial assets in one of the following four categories
under FRS 39 is as follows:
#1. Financial assets at fair value through profit or loss: Assets are classified in this category when they are incurred
principally for the purpose of selling or repurchasing in the near term (trading assets) or are derivatives
(except for a derivative that is a designated and effective hedging instrument) or have been classified in this
category because the conditions are met to use the “fair value option” and it is used. These assets are carried
at fair value by reference to the transaction price or current bid prices in an active market. All changes in fair
value relating to assets at fair value through profit or loss are recognised directly in profit or loss. They are
classified as non-current assets unless management intends to dispose of the investment within 12 months of
the end of the reporting year.
#2. Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Assets that are for sale immediately or in the near term
are not to be classified in this category. These assets are carried at amortised costs using the effective interest
method (except that short-duration receivables with no stated interest rate are normally measured at original
invoice amount unless the effect of imputing interest would be significant) minus any reduction (directly or
through the use of an allowance account) for impairment or uncollectibility.
Impairment charges are provided only when there is objective evidence that an impairment loss has been
incurred as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’)
and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated. The methodology ensures that an impairment loss is
not recognised on the initial recognition of an asset. Losses expected as a result of future events, no matter
how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of an
allowance account. The amount of the loss is recognised in profit or loss. An impairment loss is reversed if the
reversal can be related objectively to an event occurring after the impairment loss was recognised. Typically
the trade and other receivables are classified in this category.
#3. Held-to-maturity financial assets: As at year end date there were no financial assets classified in this category.
#4. Available for sale financial assets: As at year end date there were no financial assets classified in this category.
Notes to the Financial Statements
(Cont’d)
31 December 2014
