FGV Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 151 01 02 05 03 07 06 04 08 09 ANNUAL INTEGRATED REPORT 2018 EXAMINED OUR NUMBERS 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (continued) (h) Financial assets (continued) Impairment (continued) (iv) Groupings of instruments for ECL measurement (a) Collective assessment To measure ECL, trade receivables and contract assets arising from the Group have been grouped based on the days past due and shared credit risk characteristics as follows: (i) Geographical region of customers (ii) Customer division (iii) Related company and external customers (iv) Other shared credit risks The contract assets relate to amounts due from customers on contracts and unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. (b) Individual assessment Trade receivables and contract assets which are in default or credit-impaired are assessed individually. Other receivables, loans and amounts due from intercompany, financial assets at FVOCI and financial guarantee contracts are assessed on individual basis for ECL measurement, as credit risk information is obtained and monitored separately. (v) Write-off (a) Trade receivables and contract assets Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group. Impairment losses on trade receivables and contract assets are presented as net impairment losses on the face of profit or loss. Subsequent recoveries of amounts previously written off are credited against the same line item.