Wah Seong Corporation Berhad Annual Report 2019

95 ANNUAL REPORT 2019 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 (continued) (a) Standards, amendments to published standards and interpretations that are effective (continued) Effects on adoption of MFRS 16 (continued) Group (continued) Measurement of lease liabilities on 1 January 2019 The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5% per annum. The reconciliation between the operating lease commitments disclosed applying MFRS 117 as at 31 December 2018 to the lease liabilities recognised at 1 January 2019 is as follows: RM’000 Operating lease commitments disclosed as at 31 December 2018 259,937 Discounted using the lessee’s incremental borrowing rate of at the date of initial application (38,056) Less: Short-term leases recognised on a straight line basis as expense (915) Low-value leases recognised on a straight line basis as expense (552) Lease liabilities recognised as at 1 January 2019 220,414 Of which are: Current lease liabilities 9,904 Non-current lease liabilities 210,510 (b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and Company but not yet effective • The Conceptual Framework for Financial Reporting (“Framework”) (effective from 1 January 2020) was revised with the primary purpose to assist the IASB to develop IFRS that are based on consistent concepts and enable preparers to develop consistent accounting policies where an issue is not addressed by an IFRS. The Framework is not an IFRS and does not override any IFRSs. Key changes to the Framework are as follows: (i) Objective of general purpose financial reporting – clarification that the objective of financial reporting is to provide useful information to the users of financial statements for resource allocation decisions and assessment of management’s stewardship. (ii) Qualitative characteristics of useful financial information – reinstatement of the concepts prudence when making judgement of uncertain conditions and “substance over form” concept to ensure faithful representation of economic phenomenon. (iii) Clarification on reporting entity for financial reporting – introduction of new definition of a reporting entity, which might be a legal entity or a portion of a legal entity. (iv) Elements of financial statements – the definitions of an asset and a liability have been refined. Guidance in determining unit of account for assets and liabilities have been added, by considering the nature of executory contracts and substance of contracts. (v) Recognition and de-recognition – the probability threshold for asset or liability recognition have been removed. New guidance on de-recognition of asset and liability have been added. (vi) Measurement – explanation of factors to consider when selecting a measurement basis have been provided. (vii) Presentation and disclosure – clarification that statement of profit or loss (“P&L”) is the primary source of information about an entity’s financial performance for a reporting period. In principle, recycling of income or expense included in other comprehensive income to P&L is required if this results in more relevant information or a more faithful representation of P&L.