NOTES TO
FINANCIAL STATEMENTS
December 31, 2015
55
CITIC ENVIROTECH LTD.
Annual
Report
2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.2 Adoption of new and revised standards
On April 1, 2015, the Group has adopted all the new and revised FRSs and Interpretations of FRS
(“INT FRS”) that are effective from that date and are relevant to its operations. The adoption of these
new/revised FRS and INT FRSs does not result in changes to the Group’s and Company’s accounting
policies and has no material effect on the amounts reported for the current or prior years.
At the date of authorisation of these financial statements, the following new/revised FRSs, INT FRSs
and amendments to FRS that are relevant to the Group were issued but not effective:
FRS 109
Financial Instruments
2
FRS 115
Revenue from Contracts with Customer
2
Amendments to FRS 1
Presentation of Financial Statements: Disclosure Initiative
1
Amendments to FRS 16
Property, Plant and Equipment and FRS 38 Intangible Assets:
Clarification of Acceptable Methods of Depreciation and Amortisation
1
Amendments to FRS 110
Consolidated Financial Statements and FRS 28 Investments in
Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
1
Amendments to FRS 110
Consolidated Financial Statements, FRS 112 Disclosure of Interests
in Other Entities, FRS 28 Investments in Associates and Joint Ventures - Investment Entities:
Applying the Consolidation Exception
1
1
Applies to annual periods beginning on or after January 1, 2016, with early application permitted.
2
Applies to annual periods beginning on or after January 1, 2018, with early application permitted.
Consequential amendments were also made to various standards as a result of these new/revised
standards.
FRS 109
Financial Instruments
FRS 109 was issued in December 2014 to replace FRS 39
Financial Instruments: Recognition and
Measurement
and introduced new requirements for (i) the classification and measurement of financial
assets and financial liabilities, (ii) derecognition, (iii) general hedge accounting, and (iv) impairment
requirements for financial assets.
Key requirements of FRS 109 include:
All recognised financial assets that are within the scope of FRS 39 are now required to be
subsequently measured at amortised cost or fair value through profit or loss (FVTPL).
Specifically, debt investments that are held within a business model whose objective is to
collect the contractual cash flows, comprising solely payments of principal and interest on
the principal outstanding are generally measured at amortised cost at the end of subsequent
accounting period. Debt instruments that are held within a business model whose objective
is achieved both by selling financial assets, and collecting contractual cash flows comprising
payments of principal and interest on the principal amount outstanding, are measured at fair
value through other comprehensive income (FVTOCI). All other debt investments and equity
investments are measured at FVTPL at the end of subsequent accounting period. In addition,
under FRS 109, entities may make an irrevocable election, at initial recognition, to measure an
equity investment (that is not held for trading) at FVTOCI, with only dividend income generally
recognised in profit or loss.
With some exceptions, financial liabilities are generally subsequently measured at amortised
cost. With regard to the measurement of financial liabilities designated as at FVTPL, FRS 109
requires that the amount of change in fair value of the financial liability that is attributable to
changes in the credit risk of that liability is presented in other comprehensive income, unless
the recognition of the effects of changes in the liability’s credit risk in other comprehensive
income would create or enlarge an accounting mismatch to profit or loss. Changes in fair value
attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss.
Under the existing FRS 39, the entire amount of the change in the fair value of the financial
liability designated as at FVTPL is presented in profit or loss.
