Page 60 - UBF AR 2018 - E Version

NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 March 2018
3.5 Amortized cost measurement
The amortized cost of a financial asset or liability is
the amount at which the financial asset or liability is
measured at initial recognition, minus repayments, plus
or minus the cumulative amortization using the effective
interest method of any difference between the initial
amount recognized and the maturity amount, minus any
reduction for impairment.
3.6 Determination of fair value
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date.
Determination of fair value
The fair value of financial instruments that are traded in has been incurred, the amount of the loss is measured
an active market at each reporting date is determined
by reference to quoted market prices or dealer price
quotations, without any deduction for transaction costs.
For financial instruments not traded in an active market,
the fair value is determined using appropriate valuation
techniques. Such techniques may include using
recent arm’s length market transactions, reference to
the current fair value of another instrument that is
substantially the same, a discounted cash flow analysis
or other valuation models.
3.7 Impairment of Financial Assets
A financial asset not carried at fair value through profit receipts. Individually assessed impairment allowances
or loss is assessed at each reporting date to determine
whether there is objective evidence that it is impaired.
A financial asset is impaired if objective evidence
indicates that a loss event has occurred after the initial When impairment losses are determined for those
recognition of the asset, and that the loss event had a
negative effect on the estimated future cash flows of
that asset that can be estimated reliably. Objective
evidence that financial assets are impaired can include
default or delinquency by a debtor, restructuring of an
amount due to the Company on terms that the Company
would not consider otherwise, indications that a debtor
or issuer will enter bankruptcy, adverse changes in the
payment status of borrowers or issuers in the Company,
economic conditions that correlate with defaults or the
disappearance of an active market for a security.
Impairment of Financial Assets carried at Amortized
Cost
For financial assets carried at amortized cost (such as
amounts due from Company’s, loans and advances to
customers as well as held to maturity investments), the
Company first assesses individually whether objective
evidence of impairment exists for financial assets
that are individually significant, or collectively for
financial assets that are not individually significant. If
the Company determines that no objective evidence of
impairment exists for an individually assessed financial
asset, it includes financial assets with similar credit
risk characteristics and collectively assesses them
for impairment. Assets that are individually assessed
for impairment and for which an impairment loss is,
or continues to be, recognized are not included in a
collective assessment of impairment.
58 UB Finance
Individually Assessed Financial Assets
The criteria used to determine whether there is objective
evidence of impairment include and not limited to:
• Known cash flow difficulties experienced
by the borrower;
• Past due contractual payments of either
principal or interest;
• Breach of loan covenants or conditions;
• The probability that the borrower
will enter bankruptcy or other financial
reorganization; and
• A significant downgrading in credit rating
by an external credit rating agency.
If there is objective evidence that an impairment loss
as the difference between the assets carrying amount
and the present value of estimated future cash flows
(excluding future expected credit losses that have not
yet been incurred). The carrying amount of the asset
is reduced through the use of an allowance account
and the amount of the loss is recognized in the income
statement. The impairment allowances on individually
significant accounts are reviewed more regularly when
circumstances require. This normally encompasses re-
assessment of the enforceability of any collateral held
and the timing and amount of actual and anticipated
are only released when there is reasonable and objective
evidence of a reduction in the established loss estimate.
financial assets where objective evidence of impairment
exists, the following factors are considered:
• Company’s aggregate exposure to the customer;
• The viability of the customer’s business model
and their capacity to trade successfully out of
financial difficulties and generate sufficient cash
flow to service debt obligations;
• The amount and timing of expected receipts
and recoveries;
• The realizable value of security
(or other credit mitigates) and likelihood
of successful repossession;
• The likely deduction of any costs involved in
recovery of amounts outstanding;
Collectively Assessed Financial Assets
Impairment is assessed on a collective basis in two
circumstances:
• To cover losses which have been incurred
but have not yet been identified on loans subject
to individual assessment; and
• For homogeneous groups of loans that are not
considered individually significant.
Incurred but not yet identified impairment
Individually assessed financial assets for which no
evidence of loss has been specifically identified on an
individual basis are grouped together according to their
credit risk characteristics for the purpose of calculating
an estimated collective loss. This reflects impairment
losses that the Group has incurred as a result of events