148 CapitaLand Ascendas REIT Notes to the Financial Statements 31 December 2025 3.7 Impairment (i) Financial assets The Group recognises loss allowances for expected credit loss (“ECLs”) on financial assets measured at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Loss allowances of the Group are measured on either of the following bases: • Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument; or • 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). Simplified approach For trade receivables, the Group applies the simplified approach permitted by the FRS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. General approach For other financial assets at amortised cost, the Group applies the general approach to provide for ECLs. Under the general approach, the loss allowance is measured at an amount equal to 12-months ECLs at initial recognition. At each reporting date, the Group assesses whether the credit risk of a financial instrument has increased significantly since initial recognition. When credit risk has increased significantly since initial recognition, loss allowance is measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment that includes forward-looking information. The Group considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. The Group has determined the default event on a financial asset to be when internal and/or external information indicates that the financial asset is unlikely to be received, which could include default of contractual payments which are 1 to 90 days past due or there is significant financial difficulty of the counterparty. Measurement of ECLs ECLs are probability-weighted estimates or credit losses. Credit losses are measured at the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset. 3. Material Accounting Policy Information (continued)
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