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MASB issues new and amendments to standards (31 July 2012)

The Malaysian Accounting Standards Board (the Board) today issued the following pronouncements which are equivalent to the International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB):

(1) Malaysian Financial Reporting Standards (MFRSs)

  • Amendments to MFRSs contained in the document entitled Annual Improvements 2009–2011 Cycle"
  • Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to MFRS 10, MFRS 11 and MFRS 12)
  • MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004)
  • MFRS 127 Consolidated and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003)

(2) Financial Reporting Standards (FRSs)

  • Amendments to FRSs contained in the document entitled Improvements to FRSs (2012)"
  • Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to FRS 10, FRS 11 and FRS 12)

The amendments to MFRSs are applicable to all Entities Other Than Private Entities while the amendments to FRSs are applicable to Transitioning Entities (TE) that have elected to continue applying FRSs in 2012 and 2013. TE are entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and / or IC Interpretation 15 Agreements for the Construction of Real Estate (IC 15), including a parent, significant investor and venturer of such TE.

The MFRS Framework is fully IFRS compliant and the key differences between FRSs and MFRSs are that in the former; (a) FRS 2012004 Property Development Activities will continue to be the extant standard for accounting for property development activities and not IC 15; and (b) there is no equivalent standard to MFRS 141. To limit the gap to only these two standards, pronouncements issued by the IASB are issued for both the MFRS and FRS frameworks.

ABOUT THE PRONOUNCEMENTS

Annual Improvements 2009–2011 Cycle

Annual Improvements 2009–2011 Cycle contains amendments to the following MFRSs. All amendments are effective for annual periods beginning on or after 1 January 2013:

MFRSs

Subject of amendment

MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards

Repeated application of MFRS 1

Borrowing costs

MFRS 101 Presentation of Financial Statements

Clarification of the requirements for comparative information

MFRS 116 Property, Plant and Equipment

Classification of servicing equipment

MFRS 132 Financial Instruments: Presentation

Tax effect of distribution to holders of equity instruments

MFRS 134 Interim Financial Reporting

Interim financial reporting and segment information for total assets and liabilities

Similar amendments are also made to FRSs.

Amendment to MFRS 1

The amendment clarifies that an entity that had applied MFRSs or IFRSs in the past but did not do so in its most recent previous annual financial statements must either apply MFRS 1 or MFRS 108 Accounting Policies, Changes in Estimates and Errors in the period that the entity decides to reapply the MFRS framework.

The amendment also clarifies that a first-time adopter that capitalised borrowing costs in accordance with its previous GAAP before the date of transition to MFRSs shall carry forward without adjustment the amount previously capitalised at the date of transition. Any borrowing costs incurred after the date of transition that relate to qualifying assets under construction at the date of transition would be accounted for in accordance with MFRS 123 Borrowing Costs.

Amendment to MFRS 101

The amendment clarifies that an entity is required to present a third statement of financial position only if a retrospective application, retrospective restatement or reclassification has a material effect on the information in the statement of financial position at the beginning of the preceding period. Nevertheless, an entity may present comparative information in addition to the minimum comparative financial statements as long as that information is prepared in accordance with MFRSs.

Amendment to MFRS 116

The amendment clarifies that items such as spare parts, stand-by equipment and servicing equipment shall be recognised as property, plant and equipment when they meet the definition of property, plant and equipment. Otherwise, such items are classified as inventory.

Amendment to MFRS 132

The amendment clarifies that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction shall be accounted for in accordance with MFRS 112 Income Taxes.

Amendment to MFRS 134

To be consistent with the requirements in MFRS 8 Operating Segments, the amendment clarifies that an entity shall disclose the total assets and liabilities for a particular reportable segment only when the amounts are regularly provided to the chief operating decision maker and there has been a material change from the amount disclosed in the last annual financial statements for that reportable segment.

Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to MFRS 10, MFRS 11 and MFRS 12)

Entities are required to apply the amendments for annual periods beginning on or after 1 January 2013, which is aligned with the effective date of MFRS 10 Consolidated Financial Statements, MFRS 11 Joint Arrangements and MFRS 12 Disclosure of Interests in Other Entities.

The amendment clarifies that the “date of initial application” in MFRS 10 means “the beginning of the annual reporting period in which MFRS 10 is applied for the first time”.

Consequently, an entity is not required to adjust its previous accounting if:

(a) the consolidation conclusion reached upon the application of MFRS 10 is the same as previous accounting; or

(b) the entity had disposed of its interests in investees during a comparative period.

If an entity has to consolidate an investee that was not previously consolidated when applying MFRS 10 or concludes that it will no longer consolidate an investee that was previously consolidated, the amendments limit the requirement to present adjusted comparative information to the period immediately preceding the date of initial application. However, the entity is not prohibited from presenting adjusted comparative information for earlier periods.

A similar relief is also provided in MFRS 11 and MFRS 12. Additionally, entities would no longer be required to provide disclosures for unconsolidated structured entities in periods prior to the first annual period that MFRS 12 is applied.

If, upon applying MFRS 10, an entity concludes that it shall consolidate an investee that was not previously consolidated and that control was obtained before the effective date of MFRS 3 Business Combinations and MFRS 127 Consolidated and Separate Financial Statements issued by the Board in November 2011, the amendments clarify that the entity can apply the earlier versions of MFRS 3 and MFRS 127. Therefore the Board has issued MFRS 3 (IFRS 3 issued by IASB in 2004) and MFRS 127 (IAS 27 as revised by IASB in 2003) in this regard.

Similarly, the Amendments to FRS 10, FRS 11 and FRS 12 provide the choice to TE to apply either the earlier or the revised versions of FRS 3 and FRS 127 if control was obtained before the effective date of the revised versions of these Standards.

The new pronouncements are available from MASB website or can be purchased from MASB office.

Click here to download the “Notice of Issuance”.


For press enquiries, please contact:

Malaysian Accounting Standards Board

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No. 11, Jalan Pantai Jaya, 59200 Kuala Lumpur

Tel: 03-2240 9200

Fax: 03-2240 9300

Email: technical@masb.org.my