Page 108 - HRC_Annual_Report_2023

106 About HRC Value Creation Management Discussion Leadership
& Analysis

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.7 IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, the Company makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell (“FVLCTS”) and its value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating-units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value and the risks specific
to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its
recoverable amount. Impairment losses are recognised in profit or loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was
recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase
cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognised previously. Such reversal is recognised in profit or loss.
2.8 FINANCIAL ASSETS
Financial assets are recognised in the statement of financial position when, and only when, the Company becomes a party
to the contractual provisions of the financial instrument.

(a) Classification
The Company classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income (“OCI”) or through
profit or loss), and
• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss
or OCI. The Company reclassifies its debt instruments when and only when its business model for managing those
assets changes.
(b) Recognition and initial measurement
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Company
commits to purchase or sell the asset.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest (“SPPI”).