NOTES TO THE FINANCIAL STATEMENT
2. Summary of significant accounting policies (continued)
2.3 Standards and interpretations issued but not yet effective
The Group and the Company have not adopted the following standards and interpretations that have been issued but not yet effective:
Effective for
financial periods
FRS, Amendments to FRS and IC Interpretations beginning on or after Amendments to IC Interpretation 14: Prepayments of a
Minimum Funding Requirement 1 July 2011
IC Interpretation 19: Extinguishing Financial Liabilities
with Equity Instruments 1 July 2011
FRS 124: Related Party Disclosure 1 January 2012
Amendments to FRS 1: Severe Hyperinflation and
Removal of Fixed Dates for First-time Adopters 1 January 2012 Amendments to FRS 7: Disclosures – Transfers of
Financial Assets 1 January 2012
Amendments to FRS 112: Deferred Tax – Recovery of
Underlying Assets 1 January 2012
Amendments to FRS 9 (IFRS 9(2009),
FRS 9 (IFRS 9(2010)), and FRS 7 – Mandatory Effective
Date of FRS 9 and Transition Disclosures 1 March 2012 Amendments to FRS 101: Presentation of Items of
Other Comprehensive Income 1 July 2012
FRS 9 (IFRS 9(2009)): Financial Instruments (IFRS 9
issued by IASB in November 2009) 1 January 2013 FRS 9 (IFRS 9(2010)): Financial Instruments
(IFRS 9 issued by IASB in October 2010) 1 January 2013 FRS 10: Consolidated Financial Statements 1 January 2013
FRS 11: Joint Arrangements 1 January 2013
FRS 12: Disclosures of Interests in Other Entities 1 January 2013
FRS 13: Fair Value Measurement 1 January 2013
FRS 119(2011): Employee Benefits 1 January 2013
FRS 127(2011): Separate Financial Statements 1 January 2013 FRS 128(2011): Investment in Associates and
Joint Ventures 1 January 2013
IC Interpretation 20: Stripping Costs in the
Production Phase of a Surface Mine 1 January 2013 Amendments to FRS 7: Disclosure – Offsetting
Financial Assets and Financial Liabilities 1 January 2013 Amendments to FRS 132: Offsetting Financial
Assets and Financial Liabilities 1 January 2014
FRS 9 Financial Instruments 1 January 2015
56
NOTES TO THE FINANCIAL STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 (CONTINUED)
2. Summary of significant accounting policies (continued)
2.3 Standards and interpretations issued but not yet effective (continued)
The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application, except as disclosed below:
a) Amendments to FRS 101: Presentation of Items of Other Comprehensive Income
The amendments to FRS 101 change the grouping of items presented in Other Comprehensive Income. Items that could be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and has no impact on the Group’s financial position or performance.
b) FRS 9: Financial Instruments
FRS 9 reflects the first phase of work on the replacement of FRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in FRS 139. The adoption of this first phase of FRS 9 will have an effect on the classification and measurement of the Group’s financial assets but will potentially have no impact on classification and measurements of financial liabilities. The Group is in the process of making an assessment of the impact of adoption of FRS 9.
c) FRS 10: Consolidated financial statements
FRS 10 replaces the portion of FRS 127 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. FRS 10 establishes a single control model that applies to all entities including special purpose entities.
The changes introduced by FRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in FRS 127.
d) FRS 12: Disclosure of Interests in Other Entities
FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.
e) FRS 127: Separate Financial Statements
As a consequence of the new FRS 10 and FRS 12, FRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.
2011
ANNUAL REPORT
57 NOTES TO THE FINANCIAL STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 (CONTINUED)
2. Summary of significant accounting policies (continued)
2.3 Standards and interpretations issued but not yet effective (continued)
f) Amendments to FRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities
The amendments require additional information to be disclosed to enable users of financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. The amendment affects disclosure only and has no impact on the Group’s financial position or performance.
g) Amendments to FRS 132: Offsetting Financial Assets and Financial Liabilities The amendments to FRS 132 clarified that a legally enforceable right to set off is a right of set off that must not be contingent on a future event; and must be legally enforceable in the normal course of business, the event of default and the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendments further clarified that an entity will meet the net settlement criterion as provided in FRS 132 if the entity can settle amounts in a manner that the outcome is, in effect, equivalent to net settlement.
Malaysian Financial Reporting Standards (MFRS Framework)
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).
Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2013.
The Group and the Company falls within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 December 2013. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening
58
NOTES TO THE FINANCIAL STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 (CONTINUED)
2. Summary of significant accounting policies (continued)
2.3 Standards and interpretations issued but not yet effective (continued)
At the date of this financial statement, the Group and the Company have not completed their quantification of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework due to the ongoing assessment by the project team. Accordingly, the financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2011 could be different if prepared under the MFRS Framework.
The Group and the Company expect to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 December 2013.
2.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.
In business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree net identifiable assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill in the statement of financial position. The accounting policy for goodwill is set out in Note 2.8. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
2011
ANNUAL REPORT
59 NOTES TO THE FINANCIAL STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 (CONTINUED)
2. Summary of significant accounting policies (continued)