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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)
2.9 Financial assets (continued)
(b) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade date – the date on which the
Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is
recognised in the Statement of Total Return. Any amount previously recognised in other comprehensive
income relating to that asset is reclassified to the Statement of Total Return.
Trade receivables that are factored out to banks and other financial institutions with recourse to the Group
are not derecognised until the recourse period has expired and the risks and rewards of the receivables
have been fully transferred. The corresponding cash received from the financial institutions is recorded as
borrowings.
(c) Initial measurement
Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair
value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair
value through profit or loss are recognised immediately as expenses.
(d) Subsequent measurement
Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables
are subsequently carried at amortised cost using the effective interest method.
Changes in the fair values of financial assets at fair value through profit or loss including the effects of
currency translation, interest and dividends, are recognised in the Statement of Total Return when the
changes arise.
(e) Impairment
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a
group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.
(i)
Loans and receivables
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and
default or significant delay in payments are objective evidence that these financial assets are impaired.
The carrying amount of these assets is reduced through the use of an impairment allowance
account which is calculated as the difference between the carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. When the asset becomes
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are recognised against the same line item in the Statement of Total Return.