NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
2.1. Statement of compliance – Cont’d (p) Improvements to FRSs (2009)
The document entitled “Improvements to FRSs (2009)” contains amendments to 22 FRSs, which the Group will apply from the financial period beginning 1 September 2010.
The Improvements to FRS 101 has been incorporated in FRS 101 (revised) whilst the Improvements to FRS 139 has been incorporated in Amendments to FRS 139, FRS 7 and IC Interpretation 9. In addition, the Improvements to FRS 128 and the Improvements to FRS 131 amended FRS 132 and FRS 7. These consequential amendments to FRS 132 and FRS 7 have also been incorporated in Amendments to FRS 132 and Amendments to FRS 139, FRS 7 and IC Interpretation 9 respectively.
Other Improvements to FRSs (2009) are discussed below:-
• Amendment to FRS 5 Non-current Assets Held for Sale and Discontinued Operations clarifies that the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations are only those set out in the standard. The disclosure requirements of other FRSs only apply if specifically required for such non-current assets or discontinued operations. The amendment further clarifies that the general requirements of FRS 101 still apply. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 8 clarifies that an entity is required to disclose a measure of segment assets only if that measure is regularly reported to the chief operating decision maker. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 107 Statement of Cash Flows clarifies the classification of cash flows arising from operating and investing activities. Cash payments to manufacture or acquire assets held for rental to others and subsequently held for sale, and the related cash receipts, shall be classified as cash flows from operating activities. Expenditure that results in a recognised asset in the statement of financial position can be classified as cash flows from investing activities. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors clarifies that the guidance accompanying FRSs is not mandatory in selecting and applying accounting policies unless such guidance states that it is an integral part of FRSs. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 110 Events after the Reporting Period clarifies the explanation as to why a dividend declared after the reporting period does not result in the recognition of a liability. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
For the year ended 31 August 2009
2. BASIS OF PREPARATION – Cont’d
2.1. Statement of compliance – Cont’d
(p) Improvements to FRSs (2009) - Cont’d
• Amendment to FRS 116 Property, Plant and Equipment removes “property that is being constructed or developed for future use as an investment property” from the scope of the standard. The amendment also replaces the term “net selling price” with “fair value less costs to sell” in the definition of recoverable amount, for consistency with the wording used in FRS 5 and FRS 136 Impairment of Assets. It also clarifies that entities that routinely sell items of property, plant and equipment that they have previously held for rental to others shall transfer such assets to inventories at their carrying amount when they cease to be rented and are held for sale. The proceeds from the sale of such assets shall be recognised as revenue in accordance with FRS 118 Revenue. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 117 Leases removes the specific guidance regarding classification of leases of land, so as to eliminate inconsistency with the general guidance on lease classification.
Accordingly, leases of land shall be classified as either finance or operating leases using the general principles of the standard. As at the reporting date, the Group has carrying amount of prepaid lease rentals of RM13,198,397 (Note 6).
• Amendment to FRS 118 provides additional guidance regarding the determination as to whether an entity is acting as a principal or as an agent in a transaction. The amendment also replaces the term “direct costs” with “transaction costs” as defined in FRS 139, so as to remove the inconsistency between FRS 139 and the guidance in the standard relating to the definition of costs incurred in originating a financial asset that should be deferred and recognised as an adjustment to the effective interest rate. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 119 Employee Benefits clarifies that when a plan amendment reduces benefits, the effect of the reduction for future service is a curtailment and the effect of any reduction for past service is a negative past service cost. The definition of “return on plan assets” is also revised to exclude plan administration costs if they have already been included in the actuarial assumptions used to measure the defined benefit obligation. In addition, the definitions of “short-term” and “other long-term” employee benefits are amended to focus on the point in time at which the employee becomes entitled to the benefit rather than whey they
“fall due”. The amendment also removes the reference to “recognition” in relation to contingent liabilities as it was inconsistent with FRS 137 Provisions, Contingent Liabilities and Contingent Assets, which does not allow for the recognition of contingent liabilities. This amendment is not relevant to the Group’s operations.
• Amendment to FRS 120 Accounting for Government Grants and Disclosure of Government Assistance streamlines the terms used in the standard in order to achieve consistency with other standards. The amendment also requires the benefit of a government loan with a below- market rate of interest be accounted for as a government grant – measured as the difference between the initial carrying amount of the loan determined in accordance with FRS 139 and the proceeds received. This amendment is not relevant to the Group’s operations.
2. BASIS OF PREPARATION – Cont’d
2.1. Statement of compliance – Cont’d
(p) Improvements to FRSs (2009) - Cont’d
• Amendment to FRS 123 clarifies that interest expense calculated using the effective interest rate method, as described in FRS 139, is a component of borrowing costs. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 127 Consolidated and Separate Financial Statements clarifies that when a parent entity accounts for a subsidiary in its separate financial statements at fair value in accordance with FRS 139, this treatment continues when the subsidiary is subsequently classified as held for sale. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 128 Investments in Associates clarifies that when an associate is accounted for at fair value in accordance with FRS 139, the only required disclosure from the standard is the nature and extent of any significant restrictions on the ability of the associate to transfer funds to the entity in the form of cash or repayment of loans. The amendment further clarifies that an investment in an associate is treated as a single asset for impairment testing. Therefore, no impairment loss is separately allocated to the goodwill included in the investment balance. Such an impairment loss is reversed in a subsequent period to the extent that the recoverable amount of the associate increases. This amendment is not relevant to the Group’s operations.
• Amendment to FRS 129 Financial Reporting in Hyperinflationary Economies streamlines the terms used in the standard in order to achieve consistency with other standards. The amendment also clarifies the fact that in historical cost financial statements, some assets and liabilities are measured at fair value rather than historical cost. This amendment is not relevant to the Group’s operations.
• Amendment to FRS 131 Interests in Joint Ventures clarifies that when a joint venture is accounted for at fair value in accordance with FRS 139, the only required disclosures from the standard are the commitments of the venturer and the joint venture, as well as the summary financial information about assets, liabilities, income and expenses. This amendment is not relevant to the Group’s operations.
• Amendment to FRS 134 Interim Financial Reporting clarifies that earnings per share are required to be disclosed in an interim period only if the entity falls within the scope of FRS 133 Earnings Per Share. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 136 clarifies that the largest cash-generating unit (or group of units) to which goodwill is allocated for the purposes of impairment testing is an operating segment as defined in FRS 8 (i.e. before the aggregation of segments with similar economic characteristics). The amendment also extends the disclosure requirements when discounted cash flow projections
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
For the year ended 31 August 2009
2. BASIS OF PREPARATION – Cont’d
2.1. Statement of compliance – Cont’d
(p) Improvements to FRSs (2009) - Cont’d
• Amendment to FRS 138 Intangible Assets clarifies the description of valuation techniques commonly used by entities when measuring the fair value of intangible assets acquired in a business combination that are not traded in active markets. The amendment further clarifies that expenditure on advertising and promotional activities is recognised as an expense when the entity has either access to the goods or received the services. It also removes the reference to the use of anything other than the straight-line method of amortisation being rare, thereby allowing the use of the unit of production method. The adoption of this amendment is not expected to have a significant impact on the Group’s financial statements.
• Amendment to FRS 140 brings “property that is being constructed or developed for future use as an investment property” within the scope of the standard. The amendment also revises the conditions for a voluntary change in accounting policy to be consistent with FRS 108. It also clarifies that where fair value of property that is being constructed or developed for future use as an investment property is not reliably measureable, the property is measured at cost until the earlier of the date construction is completed or the date at which fair value becomes reliably measurable. This amendment is not relevant to the Group’s operations.