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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using
a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the
absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement
takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best
use or by selling it to another market participant that would use the asset in its highest and best use.
For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:-
Level 1 : Inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can
access at the measurement date;
Level 2 : Inputs other than quoted prices included within level 1, that are observable for the asset or liability, either
directly or indirectly; and
Level 3 : Inputs are unobservable inputs for the asset or liability.
The transfer of fair value between levels is determined as of the date of the event or change in circumstances that
caused the transfer.
Related Parties
A party is related to an entity (referred to as the “reporting entity”) if:-
(a) A person or a close member of that person’s family is related to a reporting entity if that person:-
(i)
has control or joint control over the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
Close members of the family of a person are those family members who may be expected to influence, or be influenced
by, that person in their dealings with the reporting entity.
(b) An entity is related to a reporting entity if any of the following conditions applies:-
(i)
the entity and the reporting entity are members of the same group (which means that each parent, subsidiary
and fellow subsidiary is related to the others).
(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of
a group of which the other entity is a member).
(iii) both entities are joint ventures of the same third party.
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) the entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an
entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are
also related to the reporting entity.
(vi) the entity is controlled or jointly controlled by a person identified in (a) above.
(vii) a person identified in (a)(i) above has significant influence over the entity or is a member of the key management
personnel of the entity (or of a parent of the entity).
(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the
reporting entity or to the parent of the reporting entity.
Related parties also include key management personnel defined as those persons having authority and responsibility
for planning, directing and controlling the activities of the reporting entity either directly or indirectly, including its
director (whether executive or otherwise) of that entity.
NOTES TO THE FINANCIAL STATEMENTS
(cont’d)