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MASB issues amendments to Standards and a new Interpretation (6 September 2013)

The Malaysian Accounting Standards Board (MASB) today issued the following pronouncements:

(1) Malaysian Financial Reporting Standards (MFRSs)

  • Recoverable Amount Disclosures for Non-Financial Assets (Amendments to MFRS 136)
  • Novation of Derivatives and Continuation of Hedge Accounting (Amendments to MFRS 139)
  • IC Interpretation 21 Levies

(2) Financial Reporting Standards (FRSs)

  • Recoverable Amount Disclosures for Non-Financial Assets (Amendments to FRS 136)
  • Novation of Derivatives and Continuation of Hedge Accounting (Amendments to FRS 139)
  • IC Interpretation 21 Levies

MFRSs are applicable to all Entities Other Than Private Entities while FRSs are applicable to Transitioning Entities (TE) that have elected to apply the FRS Framework. TE are entities within the scope of MFRS 141 Agriculture and/or IC Interpretation 15 Agreements for theConstruction of Real Estate, including the parent, significant investor and venturer of such TE.

ABOUT THE PRONOUNCEMENTS

Recoverable Amount Disclosures for Non-Financial Assets

(Amendments to MFRS 136)

The amendments are identical to the Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) issued by the International Accounting Standards Board (IASB).

The IASB made consequential amendments to some disclosure requirements in IAS 36 Impairment of Assets when it issued IFRS 13 Fair Value Measurement. However, one of the consequential amendments has resulted in the disclosure requirements being broader than intended. Instead of requiring the disclosure of the recoverable amount for impaired assets, the consequential amendment requires an entity to disclose the recoverable amount of any cash-generating unit with a significant carrying amount of goodwill or intangible assets with indefinite useful lives regardless if there is any impairment loss recognised.

The amendment addresses this unintended disclosure requirement by clarifying that recoverable amount (determined based on fair value less costs of disposal) is required to be disclosed only when an impairment loss is recognised or reversed. In addition, there are new disclosure requirements about fair value measurement when impairment or reversal of impairment is recognised.

The amendments are to be applied retrospectively for annual periods beginning on or after 1 January 2014. Earlier application is permitted for periods when an entity applies MFRS 13.

Similar amendments are also made to FRS 136 Impairment of Assets in a document entitled “Recoverable Amount Disclosures for Non-Financial Assets (Amendments to FRS 136)”.

Novation of Derivatives and Continuation of Hedge Accounting (Amendments to MFRS 139)

The amendments are identical to the Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) issued by the IASB.

The amendments provide relief from discontinuing hedge accounting in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met (in this context, a novation indicates that parties to a contract agree to replace their original counterparty with a new one).

This relief has been introduced in response to legislative changes across many jurisdictions that would lead to the widespread novation of over-the-counter derivatives. These legislative changes were prompted by a G20 commitment to improve transparency and regulatory oversight of over-the-counter derivatives in an internationally consistent and non-discriminatory way.

The amendments are to be applied retrospectively for annual periods beginning on or after 1 January 2014. Earlier application is permitted.

Similar amendments are also made to FRS 139 Financial Instruments: Recognition and Measurement in a document entitled “Novation of Derivatives and Continuation of Hedge Accounting (Amendments to FRS 139)”.

IC Interpretation 21 Levies

IC Interpretation 21 is identical to IFRIC Interpretation 21 Levies issued by the IASB.

The Interpretation is issued in response to the question on when an entity should recognise a liability to pay a levy if that liability is within the scope of MFRS 137 Provisions, Contingent Liabilities and Contingent Assets. The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. For example, if the activity that triggers the payment of the levy is the generation of revenue in the current period and the calculation of that levy is based on the revenue that was generated in a previous period, the obligating event for that levy is the generation of revenue in the current period. The generation of revenue in the previous period is necessary, but not sufficient, to create a present obligation.

The Interpretation also clarifies that the liability to pay a levy is recognised progressively if the obligating event occurs over a period of time. If an obligation to pay a levy is triggered when a minimum threshold is reached, the liability to pay a levy is recognised when that minimum activity threshold is reached.

The Interpretation is to be applied retrospectively for annual periods beginning on or after 1 January 2014. Earlier application is permitted. 

Similar Interpretation is also issued as IC Interpretation 21 Levies in FRS Framework.

Copies of the Amendments to MFRSs and FRSs are available free of charge and copies of IC Interpretation 21 are available for sale at the MASB office.

The “Notice of Issuance” can be downloaded here.

END

For enquiries, please contact:

Malaysian Accounting Standards Board
Suite 5.2, Level 5

Wisma UOA Pantai
No. 11, Jalan Pantai Jaya
59200 Kuala Lumpur

Tel: 03-2240 9200

Fax: 03-2240 9300

Email: technical@masb.org.my