SCC Holdings Berhad Annual Report 2018

SCC Holdings Berhad | Annual Report 2018 42. NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2018 (CONT’D) 2. Basis of Preparation (cont’d) (a) Statement of compliance (cont’d) Adoption of new and amended standards (cont’d) (i) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) (cont’d) (d) Effect on impairment allowance on 1 January 2018 RM’000 Group Impairment of trade receivables At 1 January 2018, as previously stated 303 Opening balance adjustments from adoption of MFRS 9 43 At 1 January 2018, as restated 346 (ii) MFRS 15 Revenue from Contracts with Customers MFRS 15 establishes a five-step model that will apply to recognition of revenue arising from contracts with customers, and provide a more structured approach in measuring and recognising revenue. Revenue is recognised when a customer obtains control of a good or service, at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. With the adoption of MFRS 15, revenue is recognised by reference to each distinct performance obligation in the contract with customer. Transaction price is allocated to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time. The Group and the Company using the modified retrospective method of adoption with the date of initial application of 1 January 2018. Accordingly, the comparative information was not restated and the cumulative effects of initial application of MFRS 15 were recognised as an adjustment to the opening balance of retained earnings as at 1 January 2018. The comparative information continued to be reported under the previous accounting policies governed under MFRS 118. In applying the modified retrospective method, the Group and the Company applied the following practical expedients: • for completed contracts that begin and end within the same annual reporting period were not restated; and • for completed contracts that have variable consideration, transaction price at the date the contract was completed was used rather than estimating variable consideration amounts in the comparative reporting periods. The adoption of MFRS 15 resulted in changes in accounting policies as stated below has no material financial impact other than reclassification of consideration paid to customers previously in distribution costs to revenue.