BIMB Integrated Annual Report 2019

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.10 Lessor accounting Leases, where the Group and the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, the leased assets are not recognised on the statement of financial position. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred. Until the financial year ended 31 December 2018, when the Group and the Company were an intermediate lessor, the subleases were classified as finance or operating leases by reference to the underlying assets. From 1 January 2019, when the Group and the Company are an intermediate lessor, it assess the lease classification of a sublease with reference to the ROU asset arising from the head lease, not with reference to the underlying asset. If a head lease is short-term lease to which the Group and the Company apply the exemption described above, then it classify the sublease as an operating lease. 2.11 Bills and other receivables Bills and other receivables are stated at amortised cost less any allowance for impairment. 2.12 Impairment Impairment of financial assets (a) Impairment of financial assets The Group recognises allowance for impairment or allowance for ECL on financial assets measured at amortised cost, financial guarantee contracts, financing commitments and debt instruments measured at FVOCI, but not to investments in equity instruments. At each reporting date, the Group first assess individually whether there is a significant increase in credit risk or objective evidence of impairment exists for significant financial assets and collectively for financial assets that are not individually significant. If it is determined that there is significant increase in credit risk or objective evidence of impairment exists, i.e. credit impaired, for an individually assessed financial assets measured at amortised cost and FVOCI, a lifetime ECL will be recognised for impairment loss which has been incurred. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 (CONTINUED) 197 BIMB HOLDINGS BERHAD 199701008362 (423858-X) Shareholders’ Information Financial Statements Additional Information Disclosure Summary