FGV Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 345 01 02 05 03 07 06 04 08 09 ANNUAL INTEGRATED REPORT 2018 EXAMINED OUR NUMBERS 62 FIRST TIME ADOPTION OF MFRS FRAMEWORK (CONTINUED) Impact of first time adoption of MFRS framework (continued) (a) MFRS 15 and 141 (continued) Transitioning adjustments arising from MFRS 15 and MFRS 141 (continued) (i) Revenue – Determining separate performance obligations (continued) In assessing whether the bundled deliverables have separate performance obligations, management determined that in most cases, these contracts are simple where each goods or service benefits the customer on its own without having to be significantly integrated, modified, customised and not highly interrelated with each other. Arising from this, transportation costs incurred prior to the transfer of control of sales of goods from the sugar operation to customers are regarded as cost of fulfilment of the contract. Freight services performed after the transfer of control of sales of goods are regarded as a separate performance obligation and recognised over time depending on the terms of the contract. Contract liability is recognised at year end for freight services billed (together with sales of goods) but where the provision of services is ongoing. (ii) Reclassification of costs relating to fulfillment of revenue contracts Prior to the adoption of MFRS 15, freight costs incurred for delivery of goods to customer port were recognised as part of selling and distribution expenses. Upon adoption of MFRS 15, these freight costs are reclassified to cost of sales as the costs were incurred to fulfill the Group’s sales contracts. (iii) Reclassification of advances received from customers to contract liabilities Prior to the adoption of MFRS 15, advances from customers were recognised as other payables in the Group’s financial statements. Upon adoption of MFRS 15, these advances are reclassified to contract liabilities as the advances were received for the fulfillment of the sales contracts. (iv) Reclassification of amounts due from customers on contracts to contract assets Prior to the adoption of MFRS 15, where the revenue recognised for a construction contract exceed the progress billings, the balance was shown as amount due from customer on contract. Upon adoption of MFRS 15, these amounts due from customers on contracts are reclassified to contract assets. (v) Remeasurement of biological assets to fair value Under FRS, agricultural produce growing on bearer plants was not recognised as an asset. Under MFRS 141, the agricultural produce growing on bearer plants meets the definition of biological asset. The agricultural produce is measured at fair value less costs to sell, with fair value changes recognised in profit or loss as the produce grows.