SCC Holdings Berhad Annual Report 2017

SCC Holdings Berhad (511477-A) | Annual Report 2017 41 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2017 (CONT’D) 2. Basis of Preparation (Cont’d) (a) Statement of Compliance (cont’d) Standards issued but not yet effective (cont’d) (ii) MFRS 15 Revenue from Contracts with Customers MFRS 15 replaces MFRS 118 Revenue , MFRS 111 Construction Contracts and related IC Interpretations. The Standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Based on the preliminary initial assessment, the Group does not expect the application of MFRS 15 to have a significant impact on financial statements. Revenue from sale of goods will be recognised when control of the products has transferred, being the point when products are delivered to customers. As the transfer of risk and rewards generally coincides with the transfer of control at point in time, the timing and amount of revenue recognised under MFRS 15 is unlikely to be materially different from its current practice. (iii) MFRS 16 Leases MFRS 16, which upon the effective date will supersede MFRS 117 Leases , introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a termof more than 12months, unless the underlying asset is of low value. Specifically, under MFRS 16, a lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the right-of- use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows. Also, the right- of-use asset and the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard, MFRS 117. In respect of the lessor accounting, MFRS 16 substantially carries forward the lessor accounting requirements in MFRS 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. The Group and the Company are assessing the impact of the above new standard on the financial statements of the Group and of the Company in the year of initial adoption. (b) Basis of measurement The financial statements of the Group and of the Company have been prepared on the historical cost basis other than as disclosed in Note 3 to the financial statements. (c) Functional and presentation currency These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is rounded to nearest thousand (“RM’000”), unless otherwise stated.