MSM Malaysia Holdings Berhad Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q) Cash and cash equivalents For the purpose of the statement of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (r) Leases The Group and Company as a lessee Leases are recognised as a right-of-use (“ROU”) asset and a corresponding liability at the date at which the leased asset is available for use by the Group and Company. (a) ROU assets ROU assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability; • any lease payments made at or before the commencement date less any lease incentives received; • any initial direct costs; and • decommissioning or restoration costs. The ROU asset is depreciated over the shorter of the right-of-use asset’s useful life and the lease term on a straight- line basis, as follows: ROU assets Estimated useful lives Leasehold land 66 to 99 years Buildings 3 to 60 years The ROU assets are adjusted for certain remeasurement of the lease liability. At each statement of financial position date, the Group assess whether there is any indication of impairment. If such an indication exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. See significant accounting policies Note 3(k) on impairment of non- financial assets. (b) Lease liabilities Lease liabilities are initially measured at the present value of the lease payments that are not paid at that date. The lease payments include the following: • Fixed payments (including in-substance fixed payments), less any lease incentive receivable; • Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date, if any; • Amounts expected to be payable by the Group under residual value guarantees; • The exercise price of a purchase and extension options if the group is reasonably certain to exercise that option, if any; and • Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option, if any. MSM Malaysia Holdings Berhad | Annual Report 2019 142