2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.1 Basis of preparation (continued) (a) Statement of compliance (continued) • Amendments to MFRS 16 on Lease Liability in a Sale and Leaseback The amendments specify that the measurement of the lease liability arises in a sale and leaseback transaction which satisfies the requirements in MFRS 15, Revenue from Contract with Customers to be accounted for as a sale. In accordance with the amendments, the seller-lessee shall determine the ‘lease payments’ or ‘revised lease payments’ in a way that does not result in the seller-lessee recognising any amount of the gain or loss that relates to the right of use it retains. The amendments shall be applied retrospectively to sale and leaseback transactions entered into after the date when the seller-lessee initially applied MFRS 16. • Amendments to MFRS 107 and MFRS 7 on Supplier Finance Arrangements The amendments require entities to disclose both qualitative and quantitative information for supplier finance arrangements (SFAs’) to enhance the transparency of SFAs and enable users to assess how these arrangements affect an entity’s liabilities, cash flows and exposure to liquidity risk. The term SFA is not defined in the amendments, instead, the characteristics of SFA are described as arrangements in which one or more finance providers offer to pay amounts an entity owes its suppliers, and the entity agrees to pay according to the terms and conditions of the arrangement at the same date as, or a date later than, suppliers are paid. The arrangements typically provide the entity with extended payment terms, or the entity’s suppliers with early payment terms, compared to the related invoice payment due date. (b) Basis of measurement The financial statements have been prepared on the historical cost convention except for derivative financial instruments, financial assets at fair value through profit or loss (“FVTPL”) and fair value through other comprehensive income (“FVOCI”), which have been measured at fair value. (c) Functional and presentation currency The financial statements are presented in Ringgit Malaysia (“RM”), which is the Bank’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand (RM’000), unless otherwise stated. (d) Use of estimates and judgement The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial statements in the period in which the estimates are revised and in any future periods affected. Significant areas of estimation, uncertainty and critical judgements used in applying accounting policies that have significant effect in determining the amount recognised in the financial statements are described in Note 2.10 – Impairment. 277 1 2 3 4 5 6 7 8 9 www.bankislam.com FINANCIAL STATEMENTS
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