Chemical Company of Malaysia Berhad Annual Report 2019

30. Significant changes in accounting policies (continued) 30.1MFRS 16, Leases (continued) Impacts on financial statements Since the Group and the Company applied the requirements of MFRS 16 retrospectively with the cumulative effect of initial application at 1 January 2019, there are no adjustments made to the prior period presented. There are no adjustments to the opening balance of retained earnings of the Group and the Company at 1 January 2019. The following table explains the difference between operating lease commitments disclosed applying MFRS 117 at 31 December 2018, and lease liabilities recognised in the statement of financial position at 1 January 2019. Group Operating lease commitments at 31 December 2018 3,308 Discounted using the incremental borrowing rate at 1 January 2019 3,178 Recognition exemption for short-term leases (25) Recognition exemption for leases of low-value assets (239) Lease liabilities recognised at 1 January 2019 2,914 30.2Amendments to MFRS 123, Borrowing Costs (Annual Improvements 2015-2017 Cycle) In previous years, borrowing costs relating to a specific qualifying asset was capitalised into the cost of the asset. The capitalisation of borrowing costs ceased when substantially all activities necessary to prepare the qualifying asset for its intended use or sale were completed. Any borrowing costs incurred subsequently were expensed off to profit or loss. Following the adoption of Amendments to MFRS 123 (Annual Improvements 2015-2017 Cycle), general borrowings now include specific borrowings which no longer have qualifying assets. Accordingly, the Group has capitalised borrowing costs for specific borrowings where the qualifying asset is no longer available. Capitalisation rate is determined as the weighted average of the borrowings of the Group outstanding during the period. Impacts on financial statements The capitalisation rate of borrowing costs for financial year ended 31 December 2019 is 4.71%. Group Impact of borrowing costs capitalisation at 31 December 2019: Increase in property, plant and equipment 2,330 Increase in deferred tax liabilities 559 Increase in retained earnings 1,771 BUSINESS OVERVIEW OTHER INFORMATION GOVERNANCE STRUCTURE 209 ANNUAL REPORT 2019 FINANCIAL STATEMENTS