Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2023 97 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 3. MATERIAL ACCOUNTING POLICY INFORMATION (CONT’D) Investments in Subsidiaries Investments in subsidiaries including the share options granted to employees of the subsidiaries, which are eliminated on consolidation, are stated in the separate financial statements of the Company at cost less impairment losses, if any. Right-of-use Assets and Lease Liabilities (i) Short-term Leases and Leases of Low-value Assets The Group and the Company apply the “short-term lease” and “lease of low-value assets” recognition exemption. For these leases, the Group and the Company recognise the lease payments as an operating expense on a straight-line method over the term of the lease unless another systematic basis is more appropriate. (ii) Right-of-use Assets Right-of-use assets are initially measured at cost. Subsequent to the initial recognition, the right-of-use assets are stated at cost less accumulated depreciation and any accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. The right-of-use assets are depreciated using the straight-line method from the commencement date to the earlier of the end of the estimated useful lives of the right-of-use assets or the end of the lease term. (iii) Lease Liabilities Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the entities’ incremental borrowing rate. Subsequent to the initial recognition, the lease liabilities are measured at amortised cost and adjusted for any lease reassessment or modifications. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out method and comprises all costs of purchase plus other costs incurred in bringing the inventories to their present location and condition. 4. OPERATING SEGMENTS The Group has one reportable segment as the Group is principally engaged in one business segment which is the provision of engineering services. The Group Chief Executive Officer (the chief operating decision maker) review internal management report at least on a quarterly basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. The Group is organised into the following geographical segments: - Malaysia - Singapore - Philippines - Taiwan - Indonesia
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