China Communications Services Corporation Limited Annual Report 2015
168
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
46. POSSIBLE IMPACT OF AMENDMENTS TO STANDARDS, NEW STANDARDS AND
INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL
ACCOUNTING YEAR ENDED 31 DECEMBER 2015
(continued)
IFRS 9 Financial Instruments
(continued)
Key requirements of IFRS 9 are:
(i)
All recognised financial assets that are within the scope of IAS 39 are subsequently measured at amortised cost or fair
value. Specifically, debt investments that are held within a business model whose objective is to collect the
contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the
principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt
instruments that are held within a business model whose objective is achieved both by collecting contractual cash
flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding, are measured at fair value through
other comprehensive income. All other debt investments and equity investments are measured at their fair value at
the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to
present subsequent changes in the fair value of an equity investment (that is not held for trading) in other
comprehensive income, with only dividend income generally recognised in profit or loss.
(ii) With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9
requires that the amount of change in the 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
in profit or loss. Changes in fair value of financial liabilities attributable to changes in the financial liability’s credit risk
are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of
the financial liability designated as at fair value through profit or loss is presented in profit or loss.
(iii) In relation to the impairment of financial assets, IFRS 9 requires an expected credits loss model, as opposed to an
incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected
credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since
initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are
recognised.
(iv) The new general hedge accounting requirements retain the three types of hedge accounting. However, greater
flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the
types of instruments that qualify for hedging instruments and the types of risk components of non-financial items
that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the
principle of an ’economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required.
Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.
The directors of the Company anticipate that the application of IFRS 9 in the future may have a material impact on amounts
reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable to provide a
reasonable estimate of the effect of IFRS 9 until the Group performs a detailed review.
