Wah Seong Corporation Berhad Annual Report 2019

94 WAH SEONG CORPORATION BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.2 Changes in accounting policies and disclosures (a) Standards, amendments to published standards and interpretations that are effective The Group and the Company have applied the following amendments for the first time for the financial year beginning on 1 January 2019: • MFRS 16 ‘Leases’ The Group has applied MFRS 16 with the date of initial application of 1 January 2019. The Group has elected to use the simplified retrospective transition method and to apply a number of practical expedients as provided in MFRS 16. The Group has also elected not to reassess whether a contract is, or contains a lease at 1 January 2019. Instead, for contracts entered into before the transition date, the Group has relied on its assessment made applying MFRS 117 and IC Interpretation 4. The Group as a lessee Under the simplified retrospective transition method, comparative information for the financial year ended 31 December 2018 was not restated and continued to be reported under the previous accounting policies governed under MFRS 117 and IC Interpretation 4. There is no impact to the opening balance of retained earnings as at 1 January 2019. The Group has also applied the following practical expedients permitted by MFRS 16 to leases previously classified as operating leases under MFRS 117: (i) the use of a single discount rate to a portfolio of leases with reasonably similar characteristics; (ii) the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases; (iii) the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease. The Group as a lessor As a lessor, the Group is not required to make any adjustment on transition. • Amendments to MFRS 128 ‘Long-term Interests in Associates and Joint Ventures’ • IC Interpretation 23 ‘Uncertainty over Income Tax Treatments’ • Annual Improvements to MFRSs 2015 – 2017 Cycle The adoption of the revised standards and amendments that are applicable from the financial year beginning on 1 January 2019 did not have any significant impact on the financial position and results of the Group and the Company, except as disclosed below. Effects on adoption of MFRS 16 Group Statements of financial position As at 1 January 2019, the change in the accounting policy has increased the right-of-use assets by RM323,036,000 and lease liabilities by RM220,414,000. Statements of changes in equity There is no impact to the Group’s retained earnings as at 1 January 2019.