FGV Audited Financial Statements 2019

41 01 S E C T I O N NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 AUDITED FINANCIAL STATEMENTS 2019 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Financial assets (continued) Impairment (i) Impairment for debt instruments and financial guarantee contracts The Group assesses on a forward looking basis the expected credit loss (“ECL”) associated with its debt instruments carried at amortised cost and at FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The Group financial instruments that are subject to the ECL model are as follows: • Receivables • Loans and amounts due from intercompany • Contract assets • Financial assets at fair value through other comprehensive income While cash and cash equivalents are also subject to the impairment requirements of MFRS 9, the identified impairment loss is deemed immaterial. ECL represent a probability-weighted estimate of the difference between present value of cash flows according to contract and present value of cash flows the Group and the Company expect to receive, over the remaining life of the financial instrument. For financial guarantee contracts, the ECL is the difference between the expected payments to reimburse the holder of the guaranteed debt instrument less any amounts that the Company expects to receive from the holder, the debtor or any other party. The measurement of ECL reflects: • an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; • the time value of money; and • reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.