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Annual Report 2020
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Notes to the Financial Statements
As at 31 March 2020
kumpulan Fima Berhad
(197201000167)(11817-V)
2.
Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(n) Leases
Accounting policies applied from 1 April 2019
(i)
As lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the
underlying asset or site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of the right-of-use assets are determined on the same basis as
those of plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurement of the lease liability.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to lease payments that depend on an index
or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising the
option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as
expenses (unless they are incurred to produce inventories) in the period in which the event or condition
that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset.