FGV Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 348 FGV HOLDINGS BERHAD EXAMINED OUR NUMBERS 62 FIRST TIME ADOPTION OF MFRS FRAMEWORK (CONTINUED) Impact of first time adoption of MFRS framework (continued) (b) Change in accounting policy upon application of MFRS 9 (continued) (ii) Impairment of financial assets (continued) • Loans to subsidiaries Loans to subsidiaries that are repayable on demand and interest-free are classified as amortised cost in the Company’s financial statements because the Company’s business model is to hold and collect the contractual cash flows and those cash flows represent SPPI. The Company applied the general 3-stage approach when determining ECL for these loans to subsidiaries. No additional loss allowance is recognised on these loans to subsidiaries upon application of MFRS 9 as all strategies indicate that the Company could fully recover the outstanding balance of the loans to subsidiaries. The total impact of adjustments made to the Group’s retained earnings and reserves as at 1 January 2018 in respect of items within the scope of MFRS 9 are as follows: Group Retained earnings RM’000 Balance as at 31 December 2017 1,564,562 Change in accounting policy based on MFRS 1 short-term exemption applied on items within scope of MFRS 9 (net of tax effects): Reclassification of investments in debt securities from AFS to FVPL 6,576 Increase in loss allowance of financial assets (31,468) Adjustment to retained earnings upon application of MFRS 9 (24,892) As restated at 1 January 2018 1,539,670