Kimlun Corporation Berhad Annual Report 2019

Annual Report 2019 Kimlun Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2019 (cont’d) 83 2. Summary of significant accounting policies (cont'd) 2.2 Changes in accounting policies (cont'd) MFRS 16 Leases (cont'd) (i) Leases previously classified as finance leases (ii) Leases previously classified as operating leases (iii) Leasehold land classifed as property, plant and equipment The Group has classified its leasehold land within property, plant and equipment and did not change the initial carrying amounts at the date of initial application for leases. The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases and leases of low-value assets. The right-of-use assets for most leases were recognised based on the carrying amount as if the standard had always been applied, apart from the use of incremental borrowing rate at the date of initial application. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application. The Group has lease contracts for various items of land, buildings, machinery and equipment. Before the adoption of MFRS 16, the Group classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. The accounting policy for leases prior to 1 January 2019 is set out in Note 2.21. Upon adoption of MFRS 16, the Group applied a single recognition and measurement approach for all leases except for short-term leases and leases of low-value assets. The accounting policy for leases beginning 1 January 2019 is set out in Note 2.21. The standard provides specific transition requirements and practical expedients which have been applied by the Group. The Group did not change the initial carrying amounts of recognised assets and liabilities at the date of initial application for leases previously classified as finance leases (i.e., the right- of-use assets and lease liabilities equal the lease assets and liabilities recognised under MFRS 117). The requirements of MFRS 16 were applied to these leases from 1 January 2019. Assets under finance leases are classified as part of property, plant and equipment and related liabilities are classified as hire purchase payables.