Notes to the financial statements Year ended 31 December 2024 3. MATERIAL ACCOUNTING POLICIES (continued) (h) Leases (continued) As a lessor (continued) To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset. If an arrangement contains lease and non-lease components, then the Group applies the principles under FRS 115 to allocate the consideration in the contract. The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘gross rental income’. (i) Impairment (i) Non-derivative financial assets The Group recognises loss allowances for expected credit losses (“ECLs”) on financial assets measured at amortised cost. Loss allowances of the Group are measured on either of the following bases: • 12-month ECLs: these are ECLs that result from default events that are possible within the 12 months after the reporting date (or for a shorter period if the expected life of the instrument is less than 12 months); or • Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument. The Group applies the simplified approach to provide for ECLs for all trade receivables. The simplified approach requires the loss allowance to be measured at an amount equal to lifetime ECLs. The Group applies the general approach of 12-month ECL at initial recognition for all other financial assets. The Group considers a financial asset to be in default when: • the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or • the financial asset is more than 90 days past due. The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. 112 CapitaLand China Trust
RkJQdWJsaXNoZXIy NTM2MDQ5