Tropicana Corporation Berhad Annual Report 2019

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) 2.2 Changes in accounting policies arising from adoption of new MFRSs and Amendments to MFRSs (cont’d.) MFRS 16 Leases (cont’d.) The Group and the Company have lease contracts for various items of premises and motor vehicles. Before the adoption of MFRS 16, the Group and the Company classified each of their leases (as lessee) at the inception date as either a finance lease or an operating lease. Refer to Note 2.18 Leases for the accounting policy prior to 1 January 2019. Upon adoption of MFRS 16, the Group and the Company applied a single recognition and measurement approach for all leases except for short-term leases and leases of low-value assets. Refer to Note 2.18 Leases for the accounting policy beginning 1 January 2019. The standard provides specific transition requirements and practical expedients, which have been applied by the Group and the Company. Leases previously classified as finance leases The Group and the Company 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 to the lease assets and liabilities recognised under MFRS 117). The requirements of MFRS 16 were applied to these leases from 1 January 2019. Leases previously accounted for as operating leases The Group and the Company 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 the incremental borrowing rate at the date of initial application. In some leases, the right-of-use assets were recognised based on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognised. 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 and the Company also applied the available practical expedients wherein it: - Used a single discount rate to a portfolio of leases with reasonably similar characteristics; - Relied on its assessment of whether leases are onerous immediately before the date of initial application; - Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the date of initial application; - Excluded the initial direct costs from the measurement of the right-of-use assets at the date of initial application; and - Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease. pg 131 Tropicana Corporation Berhad Annual Report 2019 Sustainability at Tropicana What We’ve Governed Financial Statements & Other Information