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72
JOHN DANIEL HOLDINGS LIMITED AND ITS SUBSIDIARIES
INTEGRATED ANNUAL REPORT 2011
For amounts due to the group, significant financial dif-
ficulties of the debtor, probability that the debtor will
enter bankruptcy and default of payments are all consid-
ered indicators of impairment.
In the case of equity securities classified as available-for-
sale, a significant or prolonged decline in the fair value of
the security below its cost is considered an indicator of
impairment. If any such evidence exists for available-for-
sale financial assets, the cumulative loss - measured as
the difference between the acquisition cost and current
fair value, less any impairment loss on that financial asset
previously recognised in profit or loss - is removed from
equity as a reclassification adjustment to other compre-
hensive income and recognised in profit or loss.
Impairment losses are recognised in profit or loss.
Impairment losses are reversed when an increase in the
financial asset’s recoverable amount can be related ob-
jectively to an event occurring after the impairment was
recognised, subject to the restriction that the carrying
amount of the financial asset at the date that the im-
pairment is reversed shall not exceed what the carrying
amount would have been had the impairment not been
recognised.
Reversals of impairment losses are recognised in profit or
loss except for equity investments classified as available-
for-sale.
Where financial assets are impaired through use of an al-
lowance account, the amount of the loss is recognised
in profit or loss within operating expenses. When such
assets are written off, the write off is made against the
relevant allowance account. Subsequent recoveries of
amounts previously written off are credited against op-
erating expenses.
Loans to (from) group companies
These include loans to and from holding companies, fel-
low subsidiaries, subsidiaries, joint ventures and associ-
ates and are recognised initially at fair value plus direct
transaction costs.
Loans to group companies are classified as loans and re-
ceivables.
Loans from group companies are classified as financial
liabilities measured at amortised cost.
Loans to shareholders, directors, managers and
employees
These financial assets are classified as loans and receiv-
ables.
Trade and other receivables
Trade receivables are measured at initial recognition
at fair value, and are subsequently measured at am-
ortised cost using the effective interest rate method.
Appropriate allowances for estimated irrecoverable
amounts are recognised in profit or loss when there is
objective evidence that the asset is impaired. Significant
financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payments (more than 30
days overdue) are considered indicators that the trade
receivable is impaired. The allowance recognised is mea-
sured as the difference between the asset’s carrying
amount and the present value of estimated future cash
flows discounted at the effective interest rate computed
at initial recognition.
The carrying amount of the asset is reduced through the
use of an allowance account, and the amount of the loss
is recognised in profit or loss within operating expenses.
When a trade receivable is uncollectable, it is written off
against the allowance account for trade receivables. Sub-
sequent recoveries of amounts previously written off are
credited against operating expenses in profit or loss.
Trade and other receivables are classified as loans and
receivables.
Trade and other payables
Trade payables are initially measured at fair value, and
are subsequently measured at amortised cost, using the
effective interest rate method.
Accounting Policies -
Continued
Annual Financial Statements for the 15 months ended 30 September 2011