Page 20 - Bahamas Waste inside pages

December 31, 2018
NOTES TO FINANCIAL STATEMENTS
(Expressed in Bahamian Dollars)
3. SuMMARY OF SIgNIFICANT ACCOuNTINg pOLICIES (CONTINuED)
Financial Instruments – initial recognition, subsequent measurement, and impairment effective January 1, 2018
(continued)
Impairment
The Company recognizes an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The Company has identified and documented key drivers of credit risk and credit losses of each segment of trade receivables and, using an analysis of historical data, has estimated relationships between macro-economic variables and credit risk and credit losses.
Under IFRS 9, the Company is required to measure expected credit losses of a financial instrument (except for trade receivables with no financing component and/or other instruments with a low credit risk) in a way that 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 assumptions that are available without undue cost or effort at the reporting date about
past events, current conditions and forecast of future economic conditions.
For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Com- pany has established a provision matrix for trade receivables and a vintage analysis for trade receivables that is based on historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Trade receivables are deemed fully impaired when amounts are more than 90 days past due, service relationship with the customer is terminated, all security deposits have been applied, and all reasonable attempts to collect the balances have been exhausted.
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BAHAMAS WASTE LIMITED ANNUAL REPORT 2018