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EC World Real Estate Investment Trust ANNUAL REPORT 2016
NOTES TO THE
Financial Statements
For the Financial Year ended 31 December 2016
2.
Significant accounting policies (continued)
2.8 Impairment of non-financial assets (continued)
Investment in subsidiaries (continued)
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell
and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows
that are largely independent of those from other assets. If this is the case, the recoverable amount is determined
for the cash generating unit (“CGU”) to which the asset belongs.
If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying
amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount
and recoverable amount is recognised as an impairment loss in the Statement of Total Return.
An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine
the asset’s recoverable amount or if there is a change in the events that had given rise to the impairment since
the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable
amount, provided that this amount does not exceed the carrying amount that would have been determined (net
of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior
years. A reversal of impairment loss for an asset is recognised in the Statement of Total Return.
2.9 Financial assets
(a) Classification
The Group classifies its financial assets in the following categories: financial assets at fair value through
profit or loss and loans and receivables. The classification depends on the purpose for which the assets were
acquired. Management determines the classification of its financial assets at initial recognition.
(i)
Financial assets at fair value through profit or loss
This category has two sub-categories: assets held for trading, and those designated at fair value
through profit or loss at inception. A financial asset is classified as held for trading if it is acquired
principally for the purpose of selling in the short term. Financial assets designated as at fair value
through profit or loss at inception are those that are managed and their performances are evaluated
on a fair value basis, in accordance with a documented Group investment strategy. Derivatives are
also categorised as held for trading unless they are designated as hedges. Assets in this category are
presented as current assets if they are either held for trading or are expected to be realised within 12
months after the reporting date.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are presented as current assets, except for those expected to
be realised later than 12 months after the reporting date which are presented as non-current assets.
Loans and receivables are presented as “trade and other receivables” (Note 11) and “cash and cash
equivalents” (Note 9) on the Statements of Financial Position.