TAN CHONG MOTOR HOLDINGS BERHAD
Annual Report 2014
64
NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
(h) Inventories (continued)
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
Costs of locally assembled motor vehicles, work-in-progress in respect of motor vehicles under assembly and
unassembled vehicle packs are determined at standard cost adjusted for variances which approximates actual
cost on a specific identification basis.
Costs of other raw materials, work-in-progress, manufactured inventories and trading inventories are determined
mainly on the first in first out basis whilst spare parts are determined mainly on the weighted average basis.
(i)
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments
which have an insignificant risk of changes in fair value with original maturities of three months or less, and are
used by the Group and the Company in the management of their short term commitments.
(j) Impairment
(i)
Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss, investments in
subsidiaries and investments in associates and joint venture) are assessed at each reporting date whether
there is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely,
are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair
value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the
impairment loss of the financial asset is estimated.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in
profit or loss and is measured as the difference between the asset’s carrying amount and the present value
of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount
of the asset is reduced through the use of an allowance account.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or
loss and is measured as the difference between the financial asset’s carrying amount and the present value
of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-
for-sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss
is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would
have been had the impairment not been recognised at the date the impairment is reversed. The amount of
the reversal is recognised in profit or loss.
(ii) Other assets
The carrying amounts of other assets (except for inventories, deferred tax asset and investment property
measured at fair value) are reviewed at the end of each reporting period to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For
goodwill, the recoverable amount is estimated each period at the same time.
