FRASERS HOSPITALITY TRUST ANNUAL REPORT 2015
153
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 20 JUNE 2014 (DATE OF CONSTITUTION) TO 30 SEPTEMBER 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.15 Impairment
(a)
Non-financial assets
The carrying amounts of the Stapled Group’s non-financial assets, other than investment properties, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised if the
carrying amount of an asset or its related cash-generating unit (“CGU”) exceeds its estimated recoverable
amount.
The recoverable amount of an asset or cash generating unit is the greater of its fair value less costs of
disposal and its 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 current market assessments of the time
value of money and the risks specific to the asset or cash generating unit. For the purpose of impairment
testing, assets that generate cash inflows from continuing use that are largely independent of the cash
inflows of other assets or cash generating unit.
Impairment losses are recognised in the Statements of Total Return. Impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
(b)
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to
determine whether there is any objective evidence that is impaired. A financial asset is impaired if objective
evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss
event has a negative effect on the estimated future cash flows of that asset that can be measured reliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor,
indications that debtors or issuers will enter bankruptcy, adverse changes in the payment status of
borrowers or issuers in the Stapled Group, economic conditions that correlate with defaults or the
disappearance of an active market for a security.
2.16 Stapled Securityholders’ funds
Stapled Securityholders’ funds represent the Stapled Secuityholders’ residual interest in the Stapled Group’s net
assets upon termination.
Expenses incurred in connection with the initial public offering and private placement of Stapled Securities on
the SGX-ST are deducted directly against Stapled Securityholders’ funds.
2.17 Leases
As lessor – operating lease
Leases where, the Stapled Group retains substantially all the risks and rewards of ownership of the asset are
classified as operating leases.
Lease income from operating leases is recognised in income on a straight-line basis over the lease term. Initial
direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as rental income. The accounting policy for rental income is
stated in Note 2.19(a). Variable rents are recognised as revenue in the period in which they are earned.
