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Notes to the
Financial Statements
As at 31 March 2019
2.
Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(t) Financial liabilities (cont’d.)
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade payables, other payables and amount due to related
companies.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
(i) Other financial liabilities
This is the category most relevant to the Group. After initial recognition, interest-bearing
loans and borrowings are subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance
costs in profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is extinguished. When an
existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in profit or loss.
(u) Provision for liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligations and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it
is no longer probable that an outflow of economic resources will be required to settle the obligation,
the provision is reversed. If the effect of the time value of money is material, provisions are discounted
using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
Kumpulan Fima Berhad
(11817-V)
Annual Report 2019
144