for the year ended 31 December 2016
NOTES TO THE
FINANCIAL STATEMENTS
Annual Report 2016
-
86
-
2.
Summaryofsignificantaccountingpolicies (cont’d)
2.2
Standards issued but not yet effective (cont’d)
FRS 109
Financial Instruments
FRS 109 introduces new requirements for classification andmeasurement of financial assets, impairment of
financial assets and hedge accounting. Financial assets are classified according to their contractual cash flow
characteristics and the businessmodel under which they are held. The impairment requirements in FRS 109
arebasedonanexpectedcredit lossmodel and replace theFRS39 incurred lossmodel.Adopting theexpected
credit losses requirementswill require theCompany tomake changes to its current systems and processes.
Classification andmeasurement
TheGroupcurrentlymeasures its investments inunquotedequity securitiesat cost.UnderFRS109, theGroup
will be required tomeasure the investment at fair value.Anydifferencebetween theprevious carryingamount
and the fair valuewould be recognised in the opening retained earningswhen theGroup applyFRS 109.
For its available-for-sale debt securities, theGroup intends to hold the debt instrument to collect contractual
cash flows and sell, and accordingly measured at fair value through other comprehensive income when it
applies FRS109. TheGroup does not expect any significant impact to arise from these changes.
Transition
The Group plans to adopt the new standard on the required effective date without restating prior periods’
information and recognises any difference between the previous carrying amount and the carrying amount at
the beginningof the annual reportingperiod at the date of initial application in the opening retained earnings.
FRS 116
Leases
FRS 116 requires lessees to recognisemost leases on balance sheets to reflect the rights to use the leased
assets and the associated obligations for lease payments as well as the corresponding interest expense
and depreciation charges. The standard includes two recognition exemption for lessees – leases of ‘low
value’assets and short-term leases. The new standard is effective for annual periods beginning on or after
1 January 2019.
TheGroup is currently assessing the impact of the new standard and plans to adopt the new standard on the
required effective date.
