MASB amends MFRS 9 and MFRS 7 for nature-dependent electricity contracts

The Malaysian Accounting Standards Board (MASB) today issued Contracts Referencing Nature-dependent Electricity which amends MFRS 9 Financial Instruments and MFRS 7 Financial Instruments: Disclosures (“the Amendments”). 

The Amendments is identical to Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) issued by the International Accounting Standards Board (IASB).

ABOUT THE AMENDMENTS

The Amendments responds to stakeholder concerns that the current accounting requirements may not adequately capture how nature-dependent electricity contracts^[1] affect an entity’s performance. To help entities better reflect these contracts in their financial statements, the targeted amendments include, but are not limited to, the following:

• clarifying the application of the own-use exception as per paragraph 2.4 of MFRS 9;

• permitting an entity to apply hedge accounting in MFRS 9 when these contracts are used as hedging instruments; and 

• introducing new disclosure requirements in MFRS 7 to help users of financial statements understand the effects these contracts have on the amount, timing and uncertainty of an entity’s future cash flows and financial performance.

The Amendments shall apply for annual reporting periods beginning on or after 1 January 2026. Earlier application is permitted. 

Access the Amendments and “Notice of Issuance” here. 
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^[1] Contracts referencing nature-dependent electricity are contracts that expose an entity to variability in the underlying amount of electricity because the source of electricity generation depends on uncontrollable natural conditions. This variability is typically associated with renewable electricity sources, such as sun and wind. 

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