The Malaysia Accounting Standards Board (MASB) has recently issued various amendments to the Malaysia Financial Reporting Standards (MFRSs) in view of the current Covid-19 pandemic and its impact on businesses in Malaysia and around the world. These amendments will take effect for all annual reporting on or after 1 January 2022. However, a company or an entity may opt to apply the new reporting standards earlier than the effective date.
As a business owner, it is important that you become familiar with the amendments in order to ascertain if they apply to your business operation.
When necessary, do seek clarification from the relevant authorities or from a Malaysia Accounting Company specialising in JB Accounting.
The following are some important amendments:
Amendments to MFRSs contained in the document entitled “Annual Improvements to MFRS Standards 2018–2020″
The Annual Improvements to MFRS Standards 2018–2020 covers amendments to:
• MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards – simplifies the application of MFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.
• MFRS 9 Financial Instruments – clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.
• Illustrative Examples accompanying MFRS 16 Leases – deletes from Illustrative Example 13 the reimbursement relating to leasehold improvements in order to remove any potential confusion regarding the treatment of lease incentives.
• MFRS 141 Agriculture – removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in MFRS 141 with those in other MFRS Standards.
Reference to the Conceptual Framework (Amendments to MFRS 3 Business Combinations)
The amendments update MFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version which was issued by MASB in April 2018.
Covid-19-Related Rent Concessions (Amendment to MFRS 16 Leases)
The amendment exempts lessees from having to consider individual lease contracts to determine whether rent concessions occurring as a direct consequence of the covid-19 pandemic are lease modifications and allows lessees to account for such rent concessions as if they were not lease modifications. It applies to covid-19-related rent concessions that reduce lease payments due on or before 30 June 2021.
Property, Plant and Equipment–Proceeds before Intended Use (Amendments to MFRS 116 Property, Plant and Equipment)
The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company shall recognise such sales proceeds and related cost in profit or loss.
Onerous Contracts–Cost of Fulfilling a Contract (Amendments to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets)
The amendments specify which costs an entity includes in determining the cost of fulfilling a contract for the purpose of assessing whether the contract is onerous.
The Amendments to MFRS 3, MFRS 116 and MFRS 137 as well as to those MFRSs contained in the document entitled “Annual Improvements to MFRS Standards 2018-2020” are effective for annual reporting periods beginning on or after 1 January 2022. Earlier application is permitted.
The Amendment to MFRS 16 shall apply to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted, including in financial statements not authorised for issue at 28 May 2020.
A Malaysia Accounting Company specialising in JB Accounting will assist you with your financial reporting for the year 2020 and onwards by adjusting to all the relevant amendments accordingly.