Sasbadi Annual Report 2019

PAGE 65 ANNUAL REPORT 2019 FINANCIAL STATEMENTS (continued) 1. Basis of preparation (continued) (a) Statement of compliance (continued) The Group and the Company do not plan to apply MFRS 17, Insurance Contracts that is effective for annual periods beginning on or after 1 January 2021 as it is not applicable to the Group and the Company. The initial application of the accounting standards, amendments and interpretations are not expected to have any material financial impact to the current period and prior period financial statements of the Group and the Company, except as mentioned below: MFRS 16, Leases MFRS 16 replaces the guidance in MFRS 117, Leases , IC Interpretation 4, Determining whether an Arrangement contains a Lease , IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease . MFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard which continues to be classified as finance or operating lease. Based on the Group’s preliminary assessment, the estimated impact of initial application of MFRS 16 on its consolidated financial statements as at 1 September 2019 is additional lease liabilities of approximately RM931,000 with corresponding additional right-to-use assets of RM931,000. The estimated impact on initial application is based on assessment undertaken to date and the actual impact of adopting the standard may change. (b) Basis of measurement The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2. (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 presented in RM and has been rounded to the nearest thousand, unless otherwise stated.