FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 FINANCIAL STATEMENTS 139 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 2 BASIS OF PREPARATION (CONTINUED) (ii) AccountingpronouncementsthatarenotyeteffectiveandhavenotbeenearlyadoptedbytheGroupandCompany:(continued) Effective for annual periods beginning on or after 1 January 2018 with earlier application permitted (continued) • MFRS 9 “Financial Instruments” will replace MFRS 139 “Financial Instruments: Recognition and Measurement”. (continued) Based on the assessments taken to date, the expected impact of adoption of the new standard on 1 January 2018 to the Group and Company is as follows: (continued) • For financial liabilities classified as FVTPL, the fair value changes due to own credit risk should be recognised directly to OCI. There is no subsequent recycling to profit or loss. The Group and Company does not expect any significant impact in respect of this change to its opening retained earnings as at 1 January 2018. • When a financial liability measured at amortised cost is modified without resulting in derecognition, a gain or loss, being the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate, should be recognised immediately in profit or loss. Based on the assessments taken to date, the Group and Company does not expect any impact on its financial liabilities measured on amortised cost. • The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature of the Group’s and Company’s disclosures about its financial instruments particularly in the year of adoption of the new standard. Comparatives for financial year ended 31 December 2017 will not be restated. • MFRS 15 “Revenue from Contracts with Customers” replaces MFRS 118 “Revenue” and MFRS 111 “Construction Contracts” and related interpretations. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services. A new five-step process is applied before revenue can be recognised: • Identify contracts with customers • Identify the separate performance obligations • Determine the transaction price of the contract; • Allocate the transaction price to each of the separate performance obligations; and • Recognise the revenue as each performance obligation is satisfied.