Page 90 - ICD AR21 EN

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(CONTINUED)
Other amortised cost assets
An assessment is made at each reporting date to determine whether there is objective evidence that an amortised cost asset or a group of such assets may be impaired. The amount of the impairment losses for other assets
is calculated as the difference between the asset’s carrying amount and its estimated recoverable amount. Adjustments to the provision are recorded as a charge or credit in the Corporation’s income statement.
Financial liabilities
All Sukuk issued, Commodity Murabaha financing and other liabilities issued are initially recognized at cost, net of transaction charges, being the fair value of the consideration received. Subsequently, all yield bearing financial liabilities, are measured at amortised cost by taking into account any discount or premium. Premiums are amortised, and discounts are accreted on an effective yield basis to maturity and taken to “financing cost”
in the income statement.
Offsetting of financial assets and liabilities
Financial assets and liabilities are offset only when there is a legal enforceable right to set off the recognized amounts and the Corporation intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under Financial Accounting Standards (“FAS”) issued by AAOIFI, or for gains and losses arising from a group of similar transactions.
Islamic derivative financial instruments
Islamic derivatives financial instruments represent foreign currency forward contracts and profit rate swaps. They are based on International Islamic Financial Market (IIFM) and International Swaps Derivatives Association, Inc. (ISDA) templates. These are used by the Corporation for hedging strategy only to mitigate the risk of fluctuation in foreign currency and financing cost for placements with financial institutions, Sukuk investments, financing assets and Sukuk issued. Islamic derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each reporting date. The resulting gains or losses on re-measurement are recognised in the income statement. Islamic derivatives with positive fair values
or negative fair values are reported under the ‘other assets’ or ‘accrued and other liabilities’, respectively, in the statement of financial position.
Fiduciary assets
Assets held in trust or in a fiduciary capacity are not treated as assets of the Corporation, and accordingly, are not included in the financial statements.
88 ICD ANNUAL REPORT 2021