IMPAIRMENT OF FINANCIAL ASSETS

An impairment occurs when the carrying amount of an asset exceeds its recoverable amount. IAS 39 Financial instruments: Recognition and measurement requires an entity to assess at the end of each reporting period whether there is any objective evidence that financial assets are impaired and whether the impairment impacts on future cash flows.

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UNDERSTANDING SUBSTANCE OVER FORM

Both the IASB's Framework and IAS 1 Presentation of financial statements state that transactions and events should be accounted for and presented in accordance with their substance and economic reality, and not merely their legal form.

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FINANCIAL INSTRUMENTS: CLASSIFICATION

Classification of financial assets

Under IFRS 9 Financial instruments, financial assets can be classified into four categories as follows:

• Measured at amortised cost
• Measured at fair value through profit or loss (FVTPL)

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