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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Financial Instruments (Cont’d)
(iv) Derecognition
A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows
from the financial asset expire or the financial asset is transferred to another party without retaining control or
substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the
carrying amount and the sum of the consideration received (including any new asset obtained less any new liability
assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is
discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying
amount of the financial liability extinguished or transferred to another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
(v) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specific debtor fails to make payment when due in accordance with the
original or modified terms of a debt instrument.
The Company designates corporate guarantees given to financial institutions for credit facilities granted to
subsidiaries as insurance contracts as defined in MFRS 4 Insurance Contracts. The Company recognises these
corporate guarantees as liabilities when there is a present obligation, legal or constructive, as a result of a past
event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
Property, Plant and Equipment
Property, plant and equipment other than freehold land are stated at cost less accumulated depreciation and
accumulated impairment losses, if any.
Freehold land is stated at cost less impairment losses, if any and is not depreciated.
Depreciation is charged to profit or loss (unless it is included in the carrying amount of another asset) on the straight-line
method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does
not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal
annual rates used for this purpose are:-
Freehold buildings
25 - 50 years
Long leasehold buildings
50 years
Long leasehold land
47 - 60 years
Factory and office renovation
5% - 10%
Plant and machinery
10% - 20%
Workshop tools
10% - 20%
Office equipment
33.3% - 80%
Furniture and fittings
10% - 33.3%
Motor vehicles
10% - 20%
Computers
33.3% - 85.7%
Capital work-in-progress is stated at cost. Cost comprises the direct expenditure incurred on the construction and
commissioning of the capital asset. Capital work-in-progress is not depreciated until its completion and availability for
commercial use.
NOTES TO THE FINANCIAL STATEMENTS
(cont’d)