axiata group berhad | annual report 2015
128
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
2.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED)
(b) Standards and amendments to published standards that are applicable to the Group and the Company but not yet effective
(continued)
The Group and the Company will apply the new standards and amendments to standards in the following period: (continued)
(i) Financial year beginning on/after 1 January 2016 (continued)
Annual Improvements 2012–2014 Cycle
•
MFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ clarifies that, when an asset (or disposal group) is
reclassified from ‘held for sale’ to ‘held for distribution’, or vice versa, this does not constitute a change to a plan of sale or distribution,
and does not have to be accounted for as such. This means that the asset (or disposal group) does not need to be reinstated in the
financial statements as if it had never been classified as ‘held for sale’ or ‘held for distribution’ simply because the manner of disposal
has changed. The amendment also rectifies an omission in the standard by explaining that the guidance on changes in a plan of sale
should be applied to an asset (or disposal group) which ceases to be held for distribution but is not reclassified as ‘held for sale’.
•
MFRS 7 ‘Financial Instruments: Disclosures’ adds specific guidance to help management determine whether the terms of an
arrangement to service a financial asset which has been transferred constitute continuing involvement. The amendment clarifies
that the additional disclosure on Offsetting financial assets and financial liabilities’ is not specifically required for all interim periods,
unless required by MFRS 134.
•
MFRS 119 clarifies that, when determining the discount rate for post-employment benefit obligations, it is currency that the liabilities
are denominated in that is important, not the country where they arise. The assessment whether there is a deep market in high-
quality corporate bonds is based on corporate bonds in that currency, not corporate bonds in a particular country. Similarly, where
there is no deep market in high-quality corporate bonds in that currency, government bonds denominated in the relevant currency
should be used.
•
MFRS 134 ‘Interim Financial Reporting’ requires a cross-reference from the interim financial statements to the location of that
information.
(ii) Financial year beginning on/after 1 January 2018
MFRS 9 ‘Financial Instruments’ will replace MFRS 139 “Financial Instruments: Recognition and Measurement”.
MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for
financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income (“OCI”). The basis
of classification depends on the entity’s business model and the cash flow characteristics of the financial asset. Investments in equity
instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value
in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to
collect contractual cash flows and the cash flows represent principal and interest.
For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities,
with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the
part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than to profit or loss, unless
this creates an accounting mismatch.
MFRS 9 introduces an expected credit loss model on impairment for all financial assets that replaces the incurred loss impairment model
used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before
credit losses are recognised.
MFRS 15 ‘Revenue from contracts with customers’ will replace MFRS 118 ‘Revenue’ and MFRS 111 ‘Construction contracts’ and related
interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
