D-Link 2014 Annual Report Download - page 33

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10
D-LINK CORPORATION AND SUBSIDIARIES
Notes to the consolidated financial statements
(Continued)
Receivables are assessed by internal credit rating system whether the objective evidence of
impairment exists individually for financial assets. If the Consolidated Company
determines that the objective evidence of impairment exists for an individually assessed
financial asset, then that will be individually assessed for impairment. If the Consolidated
Company determines that no objective evidence of impairment exists for an individually
assessed financial asset, it should include the asset in a group of financial assets with
similar credit risk characteristics and collectively assesses them for impairment.
An impairment loss in respect of a financial asset measured at cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar financial asset. Such
impairment loss is not reversible in subsequent periods.
An impairment loss in respect of a financial asset is deducted from the carrying amount,
except for trade receivables, for which an impairment loss is reflected in an allowance
account against the receivables. When it is determined a receivable is uncollectible, it is
written off from the allowance account. Any subsequent recovery of receivable written off
is recorded in the allowance account. Changes in the amount of the allowance account are
recognized in profit or loss.
Impairment losses on available-for-sale financial assets are recognized by reclassifying the
losses accumulated in the fair value reserve in equity to profit or loss. The initial
recognition of impairment losses on available-for-sale equity security cannot be reversed
through profit or loss. Any subsequent recovery in the fair value of an impaired
available-for-sale equity security is recognized in other comprehensive income, and
accumulated in other equity. If, in a subsequent period, the fair value of an impaired
available-for-sale debt security increases and the increase can be related objectively to an
event occurring after the impairment loss was recognized, then the impairment loss is
reversed, with the amount of the reversal recognized in profit or loss.
Impairment losses and recoveries are recognized as non-operating income and expenses in
other gains and losses.
(v) Derecognition of financial assets
The Consolidated Company derecognizes financial assets when the contractual rights of the
cash inflow from the asset are terminated, or when the Consolidated Company transfers
substantially all the risks and rewards of ownership of the financial assets.
On derecognition of a financial asset in its entirety, the difference between the carrying
amount and the sum of the consideration received or receivable and any cumulative gain or
loss that had been recognized in other comprehensive income and presented in other
equity -unrealized gains or losses from available-for-sale financial assets is recognized in
non-operating income and expense, and included in other gains and losses.