18 NOTES TO THE FINANCIAL STATEMENTS
2. Summary of signifi cant accounting policies (continued) 3 Standards 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 fi nancial statements in the period of initial application, except as disclosed below:
FRS 10: Consolidated Financial Statements
FRS 10 replaces part of FRS 127 Consolidated and Separate Financial Statements that deals with consolidated fi nancial statements and IC Interpretation 112 Consolidation – Special Purpose Entities.
Under FRS 10, an investor controls an investee when (a) the investor has power over an investee, (b) the investor has exposure, or rights, to variable returns from its involvement with the investee, and (c) the investor has ability to use its power over the investee to affect the amount of the investor’s returns. Under FRS 127 Consolidated and Separate Financial Statements, control was defi ned as the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities.
FRS 10 includes detailed guidance to explain when an investor has control over the investee.
FRS 10 requires the investor to take into account all relevant facts and circumstances.
Based on the preliminary analyses performed, FRS 10 is not expected to have any impact on the currently held investments in the Group.
FRS 12: Disclosures 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 fi nancial position or performance.
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 fi nancial statements.
FRS 13: Fair Value Measurement
FRS 13 establishes a single source of guidance under FRS for all fair value measurements.
FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted. The Group is currently assessing the impact of adoption of FRS 13.
FINANCIAL STATEMENT
54
18 NOTES TO THE FINANCIAL STATEMENTS
For the fi nancial year ended 31 December 2012
(CONTINUED)
2. Summary of signifi cant accounting policies (continued) 2.3 Standards issued but not yet effective (continued)
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 reclassifi ed (or “recycled”) to profi t or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassifi ed. The amendment affects presentation only and has no impact on the Group’s fi nancial position or performance.
FRS 9: Financial Instruments
FRS 9 refl ects the fi rst phase of work on the replacement of FRS 139 and applies to classifi cation and measurement of fi nancial assets and fi nancial liabilities as defi ned in FRS 139. The adoption of this fi rst phase of FRS 9 will have an effect on the classifi cation and measurement of the Group’s fi nancial assets but will potentially have no impact on classifi cation and measurements of fi nancial liabilities. The Group is in the process of making an assessment of the impact of adoption of FRS 9.
Amendments to FRS 132: Offsetting Financial Assets and Financial Liabilities
The amendments to FRS 132 clarifi ed 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 clarifi ed 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
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 the parent, signifi cant investor and venturer (herein called ‘Transitioning Entities’).
Based on the MASB announcement on 30 June 2012, Transitioning Entities will be allowed to defer the adoption of the new MFRS Framework from previous adoption date of 1 January 2013 to 1 January 2014. Consequently, the adoption of the MFRS Framework by the Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2014.
WWW.NPC.COM.MY > 2012 ANNUAL REPORT
FINANCIAL STATEMENT
55
18 NOTES TO THE FINANCIAL STATEMENTS
For the fi nancial year ended 31 December 2012
(CONTINUED)
2. Summary of signifi cant accounting policies (continued) 2.3 Standards issued but not yet effective (continued)
Malaysian Financial Reporting Standards (continued)
As certain subsidiaries of the Group fall within the scope of Transitioning Entities, the Group will adopt the MFRS Framework for the fi nancial year beginning 1 January 2014. In presenting its fi rst MFRS fi nancial statements, the Group will be required to restate the comparative fi nancial statements to amounts refl ecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained earnings.
At the date of these fi nancial statements, the Group has not completed its quantifi cation of the fi nancial 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 fi nancial performance and fi nancial position as disclosed in these fi nancial statements for the year ended 31 December 2012 could be different if prepared under the MFRS Framework.
The Group expects to be in a position to fully comply with the requirements of the MFRS Framework for the fi nancial year ending 31 December 2014.
2.4 Basis of consolidation
The consolidated fi nancial statements comprise the fi nancial statements of the Company and its subsidiaries as at the reporting date. The fi nancial statements of the subsidiaries used in the preparation of the consolidated fi nancial 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. Identifi able 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 profi t 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 identifi able assets.