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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.10 Financial instruments (continued)
(b) Financial liabilities (continued)
The Group designates corporate guarantees given to banks for credit facilities granted to
subsidiaries as insurance contracts as defined in MFRS 4
Insurance Contracts
. The Group
recognises these insurance contracts as recognised insurance 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 would be required to settle the obligation and reliable
estimate can be made of the amount of the obligation.
(c) Equity
An equity instrument is any contract that evidences a residual interest in the assets of the Group
and of the Company after deducting all of its liabilities. Ordinary shares are classified as equity
instruments.
Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value
of shares issued, if any, are accounted for as share premium. Both ordinary shares and share
premium are classified as equity. Transaction costs of an equity transaction are accounted for
as a deduction from equity, net of any related income tax benefit. Otherwise, they are charged
to profit or loss.
Interim dividends to shareholders are recognised in equity in the period in which they are
declared. Final dividends are recognised upon the approval of shareholders in a general
meeting.
The Group measures a liability to distribute non-cash assets as a dividend to the owners of the
Company at the fair value of the assets to be distributed. The carrying amount of the dividend is
remeasured at the end of each reporting period and at the settlement date, with any changes
recognised directly in equity as adjustments to the amount of the distribution. On settlement of
the transaction, the Group recognises the difference, if any, between the carrying amount of
the assets distributed and the carrying amount of the liability in profit or loss.
When the Group repurchases its own shares, the shares repurchased would be accounted for
using the treasury stock method.
Where the treasury stock method is applied, the shares repurchased and held as treasury shares
shall be measured and carried at the cost of repurchase on initial recognition and subsequently.
It shall not be revalued for subsequent changes in the fair value or market price of the shares.
The carrying amount of the treasury shares shall be offset against equity in the statement of
financial position. To the extent that the carrying amount of the treasury shares exceeds the
share premium account, it shall be considered as a reduction of any other reserves as may be
permitted by the Main Market Listing Requirements.
No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the
own equity instruments of the Company. If such shares are issued by resale, any difference
between the sales consideration and the carrying amount is shown as a movement in equity.