Find out all about the latest amendments to the MFRSs
Businesses around the globe are currently affected by pandemic Covid-19. The same goes for companies in Malaysia. Whether foreign-owned or local companies, both are in a predicament as to how things will be with the new normal. Financial reporting for the year 2020 and onwards will need to change accordingly. As such, the Malaysia Accounting Standards Board (MASB) has recently issued amendments to Malaysia Financial Reporting Standards (MFRSs).
The amendments cover a narrow scope, and it applies to various types of businesses. It ranges from the annual improvements to MFRS standards to onerous contracts – the cost of fulfilling a contract. The following are the amendments where applicable in financial reports:
Annual Improvement to MFRS 2018 -2020
MFRS 1 First Time Adoption of Malaysia Financial Reporting Standards. The amendment applies to a subsidiary that is adopting the MFRS for the first time. It simplifies the application concerning the measurement of cumulative translation differences. New subsidiaries or subsidiaries first time utilising the MFRS will find it easier to apply.
MFRS 9 Financial Instruments. This segment provides clarification regarding the fees a company includes for assessing new or modified financial liability terms with the original financial liability terms.
MFRS 16 Leases. The amendment is deleting Illustrative Example 13, namely: the reimbursement relating to leasehold improvement. It is to remove any potential confusion on the treatment of lease incentive
MFRS 141 Agriculture. The amendment is eliminating a requirement to exclude cash flows from taxation when determining fair value. Therefore, fair value requirements in MFRS 141 will be the same as in other parts of the MFRSs.
Reference to Conceptual Framework
MFRS 3 Business Combinations. The amendment is replacing a reference to the latest Conceptual Framework for Financial Reporting.
COVID-19 Rent Concessions
MFRS 16 Leases. The amendment is allowing lessees to account for rent concessions due to the pandemic COVID-19 as if they are not modifications made to the lease agreements. The rent concessions apply to lease payments due on or before 30 June 2021.
Proceeds Before Intended Use – Property, Plant and Equipment
MFRS 116 Property, Plant and Equipment. The amendment restricts a company to deduct from the cost of amounts received by selling items produced through property, plant and equipment before its intended use. The company must recognise such sales and related expense in profit or loss.
Cost of Fulfilling a Contract – Onerous Contracts
MFRS 137 Provision, Contingent Liabilities and Contingent Assets. The amendment indicates the costs an entity should include when determining the charges of fulfilling a contract. The purpose is to assess whether the contract is tedious or difficult.
All these amendments will take effect for annual reporting on or after 1 January 2022. If a company or an entity wishes to apply the new reporting standards earlier than the effective date, they can do so. For companies needing assistance with the latest amendments to the MFRSs in their financial reports, we are here to help you understand from A to Z.