GHL System Berhad Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 169 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 CONT’D 35. ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (cont’d) 35.1 New MFRSs adopted during the financial year (cont’d) MFRS 16 Leases (cont’d) In applying MFRS 16 for the first time, the Group and the Company has used the following practical expedients permitted by the standard: (a) Applying a single discount rate to a portfolio of leases with reasonably similar characteristics; (b) Relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review - there were no onerous contracts as at 1 January 2019; (c) Accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 and do not contain a purchase option as short-term leases; (d) Excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application; and (e) Using hindsight in determining the lease term where the contract contains options to extend or terminate the lease. On transition to MFRS 16, the Group and the Company recognised right-of-use assets and lease liabilities, recognising the difference in retained earnings/accumulated losses. The impact on transition is summarised below: As at 31 December 2018 Impact As at 1 January 2019 Note RM RM RM Group Property, plant and equipment - Owned 93,100,281 (9,988,207) 83,112,074 - Right-of-use assets (a) - 14,048,508 14,048,508 Borrowings 34,667,861 (10,065,345) 24,602,516 Lease liabilities (b) - 14,240,112 14,240,112 Retained earnings 92,335,697 (114,466) 92,221,231 Company Property, plant and equipment - Owned 10,773,169 (1,661,318) 9,111,851 - Right-of-use assets (a) - 1,782,760 1,782,760 Borrowings 229,981 (229,981) - Lease liabilities (b) - 354,186 354,186 Accumulated losses 139,679,890 2,763 139,682,653 (a) The associated right-of-use assets for property leases were measured on a cumulative basis as if the new rules had always been applied. Other right-of-use assets were measured at their carrying amounts as if the Standard had been applied since the commencement date, but discounted using the lessee’s incremental borrowing rate at the date of initial application.