logo
MASB publishes amendments to financial instruments standards (19 March 2010)

The Malaysian Accounting Standards Board (MASB) today issued amendments to financial instruments standards as follows:

  • Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters (Amendment to FRS 1)
  • Improving Disclosures about Financial Instruments (Amendments to FRS 7)
  • Amendments to FRS 132 Financial Instruments: Presentation

The Amendments to FRS 1 and FRS 7 comprise word for word of IASB’s Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters (Amendment to IFRS 1) and Improving Disclosures about Financial Instruments (Amendments to IFRS 7) respectively.

The Improving Disclosures about Financial Instruments reinforces existing principles for disclosures about liquidity risk. Also, the amendments require enhanced disclosures about fair value measurements in which a three-level fair value hierarchy is introduced. An entity is required to classify fair value measurements using this hierarchy which aims to reflect the inputs used in making the measurement.

At the same time, the Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters relieves first-time adopters of Financial Reporting Standards (FRSs) from providing the additional disclosures required from the amendments to FRS 7 as noted in the previous paragraph.

The Amendments to FRS 132 relate to the Classification of Rights Issues and the transitional provision in relation to compound instruments.

The amendments addressing the Classification of Rights Issues is virtually identical to that Classification of Rights Issues (Amendments to IAS 32) issued by IASB in October 2009. The amendments deals with accounting for rights issues (rights, options or warrants) which are denominated in a currency other than the functional currency of the issuer. Previously such rights issues were accounted for as derivative liabilities. However, the amendments issued today require that, provided certain conditions are met, such rights issues are classified as equity regardless of the currency in which the exercise price is denominated.

As for the amendments relating to compound instruments, the transitional provision that exempted entities from applying the split accounting for compound instruments issued before reporting periods of 1 January 2003 is removed.

This amendment is necessary in view that FRS 139 Financial Instruments: Recognition and Measurement, which came into effect on 1 January 2010, requires that any derivatives features embedded in the compound financial instrument are to be separated from the host contract.


These pronouncements are available from MASB website (http://www.masb.org.my) or from MASB office.

END

For enquiries, please contact:

Malaysian Accounting Standards Board

Wisma UOA Pantai

Suites 5.02, Level 5

No. 11, Jalan Pantai Jaya

59200 Kuala Lumpur

Tel: 03-2240 9200

Fax: 03-2240 9300

Email: masb@masb.org.my


Click here for the Notice of Amendment.