Impairment of financial assets
At each reporting date, the Company assesses whether there is objective evidence that a financial asset (other than a financial asset classified as fair value through profit or loss) is impaired.
The criteria used to determine if objective evidence of impairment exists include:
| (i) | significant financial difficulty of the obligor; |
| (ii) | delinquencies in interest and principal payments; and |
| (iii) | it becomes probable that the borrower will enter bankruptcy or other financial reorganization. |
Financial assets carried at amortized cost: If evidence of impairment exists, the Company recognizes an impairment loss as the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.
Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.
