MISC Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS MISC BERHAD | Annual Report 2017 198 2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.4 Pronouncements not yet in effect (cont'd.) Effective for annual periods beginning on or after 1 January 2019 • Amendments to MFRS 9: Prepayment Features with Negative Compensation • MFRS 16: Leases • Amendments to MFRS 128: Investments in Associates and Joint Ventures: Long-term Interests in Associates and Joint Ventures • Amendments to MFRS 3 (Annual Improvements to MFRS Standards 2015–2017 Cycle) • Amendments to MFRS 11 (Annual Improvements to MFRS Standards 2015–2017 Cycle) • Amendments to MFRS 112 (Annual Improvements to MFRS Standards 2015–2017 Cycle) • Amendments to MFRS 123 (Annual Improvements to MFRS Standards 2015–2017 Cycle) • IC Interpretation 23: Uncertainty over Income Tax Treatments Effective for annual periods beginning on or after 1 January 2021 • MFRS 17: Insurance Contracts Effective for a date yet to be confirmed • Amendments to MFRS 10 and 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The Group and the Corporation are expected to apply the abovementioned pronouncements beginning from the respective dates the pronouncements become effective. The initial application of the abovementioned pronouncements is not expected to have any material impact to the financial statements of the Group and the Corporation except as mentioned below: (i) MFRS 9: Financial Instruments MFRS 9 introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. During 2017, the Group has performed a detailed impact assessment of all three aspects of MFRS 9. The assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group adopts MFRS 9. Based on the analysis of the Group and the Corporation’s financial assets and liabilities as at 31 December 2017 on the basis of facts and circumstances that exist at that date, the directors of the Corporation have assessed the impact of MFRS 9 to the Group’s financial statements as follows: (i) Classification and measurement The Group does not expect a significant impact on its balance sheet or equity on applying the classification and measurement requirements of MFRS 9. It expects to continue measuring at fair value all financial assets currently held at fair value. Quoted equity shares currently held as available-for-sale ("AFS") with gains and losses recorded in Other Comprehensive Income ("OCI") will, instead be measured at fair value through profit or loss, which will increase volatility in recorded profit or loss. The AFS reserve of RM53,036,000 related to those securities, which is currently presented in OCI will be reclassified to retained earnings.