Home' Japara Healthcare Annual Report : Japara Healthcare Annual Report 2016 Contents Notes to the Financial Statements continued
For the year ended 30 June 2016
E. Capital structure and financing continued
E2. Financial instruments continued
Classification and subsequent measurement continued
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements
of Accounting Standards specifically applicable to financial instruments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are
subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the
financial asset is derecognised.
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Gains or losses are
recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
Impairment of financial assets
At the end of the reporting period the Group assesses whether there is any objective evidence that a financial asset or group of financial assets
Financial assets at amortised cost
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss
is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted
at the financial asset’s original effective interest rate.
Impairment on loans and receivables is reduced through the use of a provision account; all other impairment losses on financial assets
at amortised cost are taken directly to the asset.
Subsequent recoveries of amounts previously written off are credited against the relevant expense in profit or loss.
Available-for-sale financial assets
A significant or prolonged decline in value of an available-for-sale asset below its cost is objective evidence of impairment; in this case the
cumulative loss that has been recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification
adjustment. Any subsequent increase in the value of the asset is taken directly to other comprehensive income.
Use of estimates and judgements
Financial instruments: Measurement of fair values
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has been impaired.
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of impairment as a result
of one or more events (a ‘loss event’) having occurred, which has an impact on the estimated future cash flows of the financial asset(s).
In the case of financial assets carried at amortised cost, loss events may include indications that the debtors or a group of debtors are
experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy
or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate provision account is used to reduce the carrying
amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the
carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the provision account or the carrying
amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the provision account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Company recognises the
impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events
that have occurred are duly considered.
Derecognition of financial assets
Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to another party
whereby the Group no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities
are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the
financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets
or liabilities assumed, is recognised in profit or loss.
54 Japara Healthcare Annual Report 2016
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