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Financial Reports &
Governance HENGYUAN REFINING COMPANY BERHAD l ANNUAL REPORT 2023 107
Other Information

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

2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.8 FINANCIAL ASSETS (continued)
(c) Subsequent measurement - debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset
and the cash flow characteristics of the asset. The Company reclassifies debt instruments when and only when its
business model for managing those assets changes.
There are three measurement categories into which the Company classifies its debt instruments.
(i) Amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent SPPI are
measured at amortised cost and subject to impairment. Interest income from these financial assets is included
in other income using the effective interest rate method. Gains and losses are recognised in profit or loss within
administrative expenses when the asset is derecognised, modified or impaired.
(ii) Fair value through other comprehensive income (“FVOCI”)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’
cash flows represent SPPI, are measured at FVOCI. Movements in the carrying amount are taken through OCI,
except for the recognition of impairment gains or losses, interest income and foreign exchange gains and
losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or
loss previously recognised in OCI is reclassified from equity to profit or loss. Interest income from these financial
assets is included in other income using the effective interest rate method.
(iii) Fair value through profit or loss (“FVTPL”)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. The Company may
also irrevocably designate financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch
created by assets and liabilities being measured on different bases. Fair value changes are recognised in profit
or loss within “other operating gains/losses”.
(d) Impairment of financial assets
Impairment for debt instruments
The Company assesses on a forward-looking basis the expected credit losses (“ECL”) associated with its debt
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there
has been a significant increase in credit risk.
The Company’s financial instruments that are subject to ECL model are trade receivables and other receivables.
While cash and cash equivalents are also subject to impairment requirements of MFRS 9, the identified impairment
loss was immaterial.
ECL represent a probability-weighted estimate of the difference between present value of cash flows according to
contract and present value of cash flows the Company expects to receive, over the remaining life of the financial
instrument.
The measurement of ECL reflects:
• an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
• the time value of money; and
• reasonable and supportable information that is available without undue cost or effort at the reporting date about
past events, current conditions and forecasts of future economic conditions.