258 YINSON HOLDINGS BERHAD ACCOUNTABILITY NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 31 January 2022 4. Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Company but not yet effective (continued) (a) Financial year beginning on/after 1 February 2022 (continued) (iii) Amendments to MFRS 116 “Proceeds before intended use” Amendments to MFRS 116 “Proceeds before intended use” prohibit an entity from deducting from the cost of a property, plant and equipment the proceeds received from selling items produced by the property, plant and equipment before it is ready for its intended use. The sales proceeds should instead be recognised in profit or loss. The amendments also clarify that testing whether an asset is functioning properly refers to assessing the technical and physical performance of the property, plant and equipment. The amendments shall be applied retrospectively. (iv) Amendments to MFRS 137 “Onerous contracts - Cost of fulfilling a contract” Amendments to MFRS 137 “Onerous contracts - Cost of fulfilling a contract” clarify that direct costs of fulfilling a contract include both the incremental cost of fulfilling the contract as well as an allocation of other costs directly related to fulfilling contracts. The amendments also clarify that before recognising a separate provision for an onerous contract, impairment loss that has occurred on assets used in fulfilling the contract should be recognised. (b) Financial year beginning on/after 1 February 2023 (i) Annual Improvements to MFRS 101 “Classification of liabilities as current or non-current” Annual Improvements to MFRS 101 “Classification of liabilities as current or non-current” clarify that a liability is classified as non-current if an entity has a substantive right at the end of the reporting period to defer settlement for at least 12 months after the reporting period. If the right to defer settlement of a liability is subject to the entity complying with specified conditions (for example, debt covenants), the right exists at the end of the reporting period only if the entity complies with those conditions at that date. The amendments further clarify that the entity must comply with the conditions at the end of the reporting period even if the lender does not test compliance until a later date. The assessment of whether an entity has the right to defer settlement of a liability at the reporting date is not affected by expectations of the entity or events after the reporting date. In addition, the amendments clarify that when a liability could be settled by the transfer of an entity’s own equity instruments (e.g. a conversion option in a convertible bond), the conversion option does not affect the classification of the convertible bond if the option meets the definition of an equity instrument in accordance with MFRS 132 “Financial Instruments: Presentation”. A conversion option that is not an equity should therefore be considered in the current or non-current classification of the convertible instrument. The amendments shall be applied retrospectively. (ii) Amendments to MFRS 112 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction” Amendments to MFRS 112 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction” clarify that the initial exemption rule does not apply to transactions where both an asset and a liability are recognised at the same time such as leases and decommissioning obligations. Accordingly, entities are required to recognise both deferred tax assets and liabilities for all deductible and taxable temporary differences arising from such transactions.
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