MASB amends 3 Standards and issues 3 Interpretations (19 May 2009)

The Malaysian Accounting Standards Board (MASB) today announced the issuance of a revised Standard and two limited amendments to Financial Reporting Standards (FRSs), together with the issuance of three new Interpretations. The revised Standard, amendments and Interpretations, which are virtually identical to those issued by the International Accounting Standards Board (IASB), are:

  • FRS 123 Borrowing Costs
  • Amendments to FRS 2 Share-based Payment: Vesting Conditions and Cancellations
  • Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
  • IC Interpretation 11 FRS 2 - Group and Treasury Share Transactions
  • IC Interpretation 13 Customer Loyalty Programmes
  • IC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
The Standards, already effective internationally, are mainly improvements and guidance issued by the IASB after their consultative process with standard-setters worldwide and interested parties.

About the Standards
FRS 123 which replaces FRS 1232004, removes the option of immediately recognising as an expense borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.
The amendments to FRS 2 clarify that vesting conditions are service conditions and performance conditions only and do not include other features of a share-based payment; also the amendments clarify that cancellations by parties other than the entity are to be treated in the same way as cancellations by the entity. 
First-time adopters of the FRS framework would welcome the amendment to FRS 1 as it allows them to measure the initial cost of investments in subsidiaries, jointly controlled entities (JCE) and associates either at fair value or the previous carrying amount. Without this amendment, first-time adopters may face practical difficulties on transition to the FRS framework as these investments would have to be measured in accordance with FRS 127 retrospectively. As a result, the requirement to distinguish between pre and post acquisition dividends from a subsidiary, JCE or associates is removed but at the same time, a new impairment indicator is included in the standard on impairment.
FRS 127 has also been amended to deal with situations where a parent reorganises its group by establishing a new entity as its parent. Under the new rules, the new parent measures the cost of its investment in the original parent at the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the reorganisation date.

About the Interpretations
IC Interpretation 11 clarifies how share-based payment transactions involving its own or another entity's instruments in the same group are to be treated and that cancellations by parties other than the entity are to be treated in the same way as cancellations by the entity.
IC Interpretation 13 explains how entities that grant loyalty award points to its customers should account for their obligation to provide free or discounted goods or services if and when the customers redeem the points. 
IC Interpretation 14 addresses how entities should determine the limit placed on the amount of a surplus in a pension plan they can recognise as an asset. Also, it addresses how a minimum funding requirement affects that limit and when a minimum funding requirement creates an onerous obligation that should be recognised as a liability in addition to that otherwise recognised under IAS 19. 
The new FRSs and Interpretations are available from MASB website (http://www.masb.org.my) or can be purchased in booklet form from MASB office.


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