2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.1 Basis of preparation (continued) (a) Statement of compliance (continued) MFRS Practise Statement 2 was amended to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The amendments to MFRS 108, redefined accounting estimates as “monetary amounts in financial statements that are subject to measurement uncertainty”. To distinguish from changes in accounting policies, the amendments clarify that effects of a change in an input or measurement technique used to develop an accounting estimate is a change in accounting estimate, if they do not arise from prior period errors. • Amendments to MFRS 112 on Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments clarify that the initial exemption rule does not apply to transactions where both an asset and liability are recognised at the same time such as leases and decommissioning obligations. Accordingly, companies are required to recognise both deferred tax assets and liabilities for all deductible and taxable temporary differences arising from such transactions. MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2024. • Amendments to MFRS 101, Classification of liabilities as current or non-current (2020 amendments) and Non-current Liabilities with Covenants (2022 amendments) There are two amendments to MFRS 101, Presentation of Financial Statements. The 2020 amendments clarify that a liability is classified as non-current if an entity has the right to defer settlement for at least 12 months after the reporting period. Such a right exists when an entity complies with covenants based on it circumstances at the reporting date, even if compliance with such covenants were tested only within 12 months after that date. The 2022 amendments were in response to concerns raised on applying the 2020 amendments explained in the preceding paragraph on the current vs non-current classification of liabilities with covenants that would have become effective for annual periods beginning or after 2023. The 2020 amendments specify that covenants of loan arrangements which an entity must comply with only after the reporting date would not affect classification of a liabilities as current or non-current at the reporting date. However, those covenants that an entity is required to comply with on or before the reporting date would affect classification of a liability as current or non-current, even if the covenant is only assessed after the reporting date. Both amendments are effective for annual reporting periods beginning on or after 1 January 2024 and shall be applied retrospectively. Earlier application of the 2022 amendments is permitted but only if the 2020 amendments are also applied from the same date. 276 Notes to the Financial Statements for the financial year ended 31 December 2023 Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023
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