FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 FINANCIAL STATEMENTS 141 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 2 BASIS OF PREPARATION (CONTINUED) (ii) Accounting pronouncements that are not yet effective and have not been early adopted by the Group and Company: (continued) Effective for annual periods beginning on or after 1 January 2018 with earlier application permitted (continued) • MFRS 141 ‘Agriculture’ and Amendments to MFRS 116 ‘Property, Plant and Equipment’ and MFRS 141 The Amendments to MFRS 116 ‘Property, Plant and Equipment’ and MFRS 141 ‘Agriculture’ introduce a new category of biological asset, i.e. the bearer plants. A bearer plant is a living plant that is used in the production and supply of agricultural produce, is expected to bear produce for more than one period, and has remote likelihood of being sold as agricultural produce (except for incidental scrap sales). Bearer plants are seen as similar to an item of machinery in a manufacturing plant, and therefore are treated the same way under MFRS 116 ‘Property, Plant and Equipment’. Therefore, bearer plants are measured either at cost or revalued amounts, less accumulated depreciation and impairment losses. Agricultural produce growing on bearer plants are measured at fair value less costs to sell, with fair value changes recognised in profit or loss as the produce grows. However, there are two occasions where the standard permits departure from fair value: at the early stage of an asset’s life; and when fair value cannot be measured reliably on initial recognition. The Group has changed its policy to align to the underlying principle of the amendments in respect of the bearer plants in previous financial year. As such, the Group does not expect any material impact when the amendments are effective for the Group on 1 January 2018. In respect of its agricultural produce, the Group expects its opening retained earnings as at 1 January 2017 to increase by approximately RM52 million to account for the recognition of its agriculture produce measured at fair value less cost to sell (including deferred tax) upon adoption of the standard.