PRG Holdings Berhad Annual Report 2018

5. ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (continued) 5.2 Explanation of transition to MFRSs (continued) Notes to the reconciliations (i) Adoption of MFRS 15 MFRS 15 establishes a comprehensive framework for revenue recognition and measurement. It replaces FRS 118 Revenue , FRS 111 Construction Contracts , FRS 201 (2004) Property Development Activities and related Interpretations. Under MFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control, at a point in time or over time, requires significant judgement. In applying MFRS 15 retrospectively, the Group applied the following practical expedients: (a) For completed contracts, contracts that begin and end within the same annual reporting period were not restated; (b) For completed contracts that have variable consideration, rather than estimating variable consideration amounts in the comparative reporting periods, transaction price at the date the contract was completed was used; and (c) For all reporting period presented before the date of initial application, the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the revenue is expected to be recognised need not be disclosed. The MFRS 15 adjustments are mainly due to: (a) Changes to the timing of revenue recognition for construction and property development activities; (b) Reclassification of excess of revenue earned over the billings on construction and property development contracts to contract assets; (c) Reclassification of excess of billings over revenue earned on construction and property development contracts, deferred income and customers deposit to contract liabilities; and (d) Reclassification of property development costs to inventories. (ii) Adoption of MFRS 9 MFRS 9 replaces FRS 139 Financial Instruments: Recognition and Measuremen t for annual periods beginning on or after 1 January 2018, encompassing all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. (a) Classification of financial assets and financial liabilities The Group and the Company classify their financial assets into the following measurement categories depending on the business model of the Group and the Company for managing the financial assets and the terms of contractual cash flows of the financial assets: (i) Those to be measured at amortised cost; and (ii) Those to be measured subsequently at fair value either through other comprehensive income or through profit or loss. The following summarises the key changes: (i) The Available-For-Sale (‘AFS’), Held-To-Maturity (‘HTM’) and Loans and Receivables (‘L&R’) financial asset categories were removed. (ii) A new financial asset category measured at Amortised Cost (‘AC’) was introduced. This applies to financial assets with contractual cash flow characteristics that are solely payments of principal and interest and held in a business model whose objective is achieved by collecting contractual cash flows. 2018 A N N U A L R E P O R T 104 notes to the financial statements 31 December 2018 (continued)