MFRS102 Inventories

Definitions

Inventories are assets:

(a) Held for sale in the ordinary course of business;

(b) In the process of production for such sale; or
(c) In the form of materials or supplies to be consumed in the production process or in the
rendering of services.

Net realizable value is the estimates selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.

Measurement of inventories

Inventories shall be measured at the lower of cost and net realizable value.

Cost of inventories

The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs
incurred in bringing the inventories to their present location condition.

Cost of purchase

The cost of purchase of inventories comprise the purchase price, import duties and others taxes
(other than those subsequently recoverable by the entity from the taxing authorities), and
transport, handling and other costs directly attributable to the acquisition of finished goods,
materials and services. Trade discounts, rebates and other similar items are deducted in
determining the costs of purchase.

Paragraph 25 - The cost of inventories, other than those dealt with in paragraph 23, shall be
assigned by using the first-in, first-out (FIFO) or weighted average cost formula. An entity shall
use the same cost formula for all inventories having a similar nature and use to the entity. For
inventories with a different nature or use, different cost formulas may be justified.
Disclosure

The financial statements shall disclose:

(a) The accounting policies adopted in measuring inventories, including the cost formula
used;
(b) The total carrying amount of inventories and the carrying amount in classifications
appropriate to the entity;
(c) The carrying amount of inventories carried at fair value less costs to sell;
(d) The amount of inventories recognized as an expense during the period;
(e) The amount of any write-down of inventories recognized as an expense in the period in
accordance with paragraph 34;
(f) The amount of any reversal of any write-down that is recognized as a reduction in the
amount of inventories recognized as expense in the period in accordance with paragraph
34;
(g) The circumstances or events that led to the reversal of a write-down of inventories in
accordance with paragraph 34; and
(h) The carrying amount of inventories pledged as security for liabilities.

MFRS 116 - Property, Plant and Equipment

Definition

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful
life.

Recoginition

The cost of an item of property, plant and equipment shall be recognized as an asset if, and only
if:

(a) It is probable that future economic benefits associated with the item will flow to the
entity; and
(b) The cost of the item can be measured reliably.
 An entity evaluates under the general recognition principle all property, plant and equipment
costs at the time they are incurred. Those costs include costs incurred initially to acquire or
construct an item of property. Those costs include costs incurred initially to acquire or construct
an item of property, plant and equipment and costs incurred subsequently to add to, replace part
of, or service an item.

Depreciation

Each part of an item of property, plant and equipment with a cost that is significant in
relation to the total cost of the item shall be depreciated separately. The depreciation charge for
each period shall be recognized in profit or loss unless it is included in the carrying amount of
another asset. The depreciable amount of an asset shall be allocated on a systematic basis over its
useful life.
The depreciation method applied to an asset shall be reviewed at least at each financial
year-end and, if there has been a significant change in the expected pattern of consumption of the
future economic benefits embodied in the asset, the method shall be changed to reflect the
changed pattern. Such a change shall be accounted for as a change in an accounting estimate in
accordance with MFRS 108.

Disclosure

(a) The measurement bases used for determining the gross carrying amount;
(b) The depreciation methods used;
(c) The useful lives or the depreciation rates used;
(d) The gross carrying amount and the accumulated depreciation (aggregated with
accumulated impairment losses) at the beginning and end of the period ; and
(e) A reconciliation of the carrying amount at the beginning and end of the period showing :

MFRS117 Leases

Definitions

The following terms are used in this standard with the meanings specified:
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series
of payment the right to use an asset for an agreed period of time.

A finance lease is a lease that transfers substantially all the risks and rewards incidental to
ownership of an asset. Title may or may not eventually be transferred.

An operating lease is a lease other than a finance lease.

Recognition

At the commencement of the lease term, lessees shall recognize finance leases as assets
and liabilities in their statements of financial position at amounts equal to the fair value of the
leased property or, if lower, the present value of the minimum lease payments, each determined
at the inception of the lease.
Lease payments under an operating lease shall be recognized as an expense on a straight-
line basis over the lease term unless another systematic basis is more representative of the time
pattern of the users benefit.

Measurement

Minimum lease payment shall be apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge shall be allocated to each period during
the lease term so as to produce a constant periodic rate of interest on the remaining balance of the
liability. Contingent rents shall be charged as expense in the periods in which they are incurred.

For operating leases, lease payments (excluding costs for services such as insurance and
maintenance) are recognized as an expense on a straight-line basis unless another systematic
basis is representative of the time pattern of the users benefit, even if the payments are not on
that basis.
Disclosure

Lessees shall, in addition to meeting the requirement of MFRS 7, make the following disclosures
for operating leases:
 (a) The total of future minimum lease payment under non-cancellable operating lease for
each of the following periods:
(i) Not later than one year;
(ii) Later than one year and not later than five years
(iii) Later than five years

(b) The total of future minimum sublease payment expected to be received under non-
cancellable sublease at the end of the reporting period.
(c) Lease and sublease payment recognized as an expense in the period, with separate
amount for minimum lease payment, contingent rents, and sublease payments.
(d) A general description of the lessees significant leasing arrangements including, but not
limited to, the following:
(i) The basis on which contingent rent payable is determined;
(ii) The existence and terms of renewal or purchase option and escalation
clauses; and
(iii) Restricting imposed by lease arrangements, such as those concerning
dividends, additional debt and further leasing.
(iv)

MFRS118 - Revenue

Definition

The following term are used in this standard with the meanings specified:

Revenue is the gross inflow of economic benefit during the period arising in the course of the
ordinary activities of an entity when those inflows result in increases in equity, other than
increases relating to contributions from equity participants.

Measurement of revenue

Revenue shall be measures at the fair value of the consideration received or receivable.
The amount of revenue arising on transaction is usually determined by agreement between the
entity and the buyer or user of the asset. It is measured at the fair value of the consideration
received or receivable taking into account the amount of any trade discount and volume rebates
allowed by the entity.
Disclosure

An entity shall disclose:

(a) The accounting policies adopted for the recognition of revenue, including the methods
adopted to determine the stage of completion of transaction involving the rendering of
services;
(b) The amount of each significant category of revenue recognized during the period,
including revenue arising from:
(i) The sale of good;
(ii) The rendering of services;
(iii) Interest
(iv) Royalties
(v) Dividends; and
(c) The amount of revenue arising from exchanges of goods or services included in each
significant category of revenue.

MFRS121 - The Effects of Changes in Foreign Exchange Rates

Definitions

The following terms are used in this standard with the meanings specified:

Foreign currency is a currency other than the functional currency of the entity.

Foreign operation is an entity that is a subsidiary, associate, joint arrangement or barnch of a

reporting entity, the activities of which are based or conducted in a country or currency other
than those of the reporting entity.

Functional currency is the currency of the primary economic environment in which the entity
operates.

Recognition of exchange differences

Exchange differences arising on the settlement of monetary items or on translating

monetary items at rates different from those at which they were translated on initial recognition
during the period or in previous financial statement shall be recognized in profit or loss in the
period in which they arise, except as described in paragraph 32.

When a gain or loss on non-monetary item is recognized in other comprehensive income,

any exchange component of that gain or loss shall be recognized in other comprehensive income.
Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any
exchange component of that gain or loss shall be recognized in profit or loss.

Disclosure

An entity shall disclose:

(a) The amount of exchange differences recognized in profit or loss except for those arising
on financial instruments measured at fair value through profit or loss in accordance with
MFRS 139; and
(b) Net exchange difference recognized in other comprehensive income and accumulated in a
separate component of equity, and a reconciliation of the amount of such exchange
different at the beginning and end of the period.

When the presentation currency is different from the functional currency, that fact shall be
stated, together with disclosure of the functional currency and the reason for using a different
presentation currency.

When there is a change in the functional currency of either the reporting entity or a
significant foreign operation, that fact and the reason for the change in functional currency shall
be disclosed.

When an entity presents its financial statement in currency that is different from its functional
currency, it shall describe the financial statement as complying with MFRSs only if they comply
with all the requirements of MFRSs including the translation method set out in paragraphs 39
and 42.