EXCEL FORCE MSC BERHAD Annual Report 2018

61 ANNUAL REPORT 2018 2. Basis of Preparation (cont’d) (a) Statement of compliance (cont’d) Standards issued but not yet effective (cont’d) The initial application of the abovementioned new standards and amendments to standards are not expected to have any significant impacts on the financial statements of the Group and of the Company except as mentioned below: (cont’d) MFRS 16 Leases (cont’d) 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 impact of the new standards and amendments to standards on the financial statements of the Group and of the Company are currently being assessed by management. (b) Functional and presentation currency These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest RM except when otherwise stated. (c) Significant accounting judgments, estimates and assumptions The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. Judgements The following are the judgements made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements: Satisfaction of performance obligations in relation to contracts with customers The Group is required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time or at a point in time in order to determine the appropriate method for recognising revenue. This assessment was made based on the terms and conditions of the contracts, and the provisions of relevant laws and regulations: The Group recognises revenue over time in the following circumstances: (a) the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs; (b) the Group does not create an asset with an alternative use to the Group and has an enforceable right to payment for performance completed to date; and (c) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. Notes To The Financial Statements 31 December 2018 (cont’d)