Page 88 - Annual Report

HONG KONG ACADEMY OF MEDICINE HONG KONG ACADEMY OF MEDICINE
香 香港醫學專科學院 香 香港醫學專科學院
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024 FOR THE YEAR ENDED 31 DECEMBER 2024

2. BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) 2. BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

g) Credit losses and impairment of assets (Continued) g) Credit losses and impairment of assets (Continued)

(i) Credit losses from financial instruments (Continued) (i) Credit losses from financial instruments (Continued)

Significant increases in credit risk (Continued) Write-off policy (Continued)

ECLs are remeasured at each reporting date to reflect changes in the financial Subsequent recoveries of an asset that was previously written off are recognised as a
instrument’s credit risk since initial recognition. Any change in the ECL amount is reversal of impairment in profit or loss in the period in which the recovery occurs.
recognised as an impairment gain or loss in profit or loss. The Group recognises an
impairment gain or loss for all financial instruments with a corresponding adjustment to (ii) Impairment of other non-current assets
their carrying amount through a loss allowance account, except for investments in
financial assets that are measured at FVOCI (recycling), for which the loss allowance is Assets are tested for impairment whenever events or changes in circumstances indicate
recognised in other comprehensive income and shall not reduce the carrying amount of that the carrying amount may not be recoverable.
the financial asset in the statement of financial position.
Internal and external sources of information are reviewed at the end of each reporting
Basis of calculation of interest income period to identify indications that plant and equipment including right-of-use assets may
be impaired or, an impairment loss previously recognised no longer exists or may have
Interest income recognised in accordance with note 2(n) is calculated based on the gross decreased.
carrying amount of the financial asset unless the financial asset is credit-impaired, in
which case interest income is calculated based on the amortised cost (i.e. the gross If any such indication exists, the asset’s recoverable amount is estimated:
carrying amount less loss allowance) of the financial asset.
– Calculation of recoverable amount
At each reporting date, the Group assesses whether a financial asset is credit-impaired. A
financial asset is credit-impaired when one or more events that have a detrimental impact The recoverable amount of an asset is the greater of its fair value less costs of
on the estimated future cash flows of the financial asset have occurred. disposal and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects
Evidence that a financial asset is credit-impaired includes the following observable current market assessments of the time value of money and the risks specific to the
events: asset. Where an asset does not generate cash inflows largely independent of those
from other assets, the recoverable amount is determined for the smallest group of
– significant financial difficulties of the debtor; assets that generates cash inflows independently (i.e. a cash-generating unit).

– a breach of contract, such as a default or delinquency in interest or principal – Recognition of impairment losses
payments;

– it becoming probable that the debtor will enter into bankruptcy or other financial An impairment loss is recognised in profit or loss if the carrying amount of an asset,
reorganisation; or the cash-generating unit to which it belongs, exceeds its recoverable amount.
Impairment losses recognised in respect of cash-generating units are allocated to
– significant changes in the technological, market, economic or legal environment that reduce the carrying amount of the assets in the unit (or group of units) on a pro rata
have an adverse effect on the debtor; or basis, except that the carrying value of an asset will not be reduced below its
individual fair value less costs of disposal (if measurable) or value in use (if
– the disappearance of an active market for a security because of financial difficulties determinable).
of the issuer.
– Reversals of impairment losses
Write-off policy
An impairment loss is reversed if there has been a favourable change in the
The gross carrying amount of a financial asset is written off (either partially or in full) to the estimates used to determine the recoverable amount.
extent that there is no realistic prospect of recovery. This is generally the case when the
Group determines that the debtor does not have assets or sources of income that could A reversal of an impairment loss is limited to the asset’s carrying amount that would
generate sufficient cash flows to repay the amounts subject to the write-off. Financial have been determined had no impairment loss been recognised in prior years.
assets written off may still be subject to enforcement activities under the Group’s recovery Reversals of impairment losses are credited to profit or loss in the year in which the
procedures, taking into account legal advice where appropriate. reversals are recognised.

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86 HKAM Annual Report 2025