Excel Force MSC Berhad Annual Report 2016

EXCEL FORCE MSC BERHAD ANNUAL REPORT 2016 69 Notes to the Financial Statements 31 December 2016 (cont’d) 4. SIGNIFICANT ACCOUNTING POLICIES (cont’d) 4.20 Operating segments (cont’d) An operating segment may engage in business activities for which it has yet to earn revenue. The Group reports separately information about each operating segment that meets any of the following quantitative thresholds: (a) Its reported revenue, including both sales to external customers and intersegment sales or transfers, is ten (10) per cent or more of the combined revenue, internal and external, of all operating segments. (b) The absolute amount of its reported profit or loss is ten (10) per cent or more of the greater, in absolute amount of: (i) The combined reported profit of all operating segments that did not report a loss; and (ii) The combined reported loss of all operating segments that reported a loss. (c) Its assets are ten (10) per cent or more of the combined assets of all operating segments. Operating segments that do not meet any of the quantitative thresholdsmay be considered reportable, and separately disclosed, if the management believes that information about the segment would be useful to users of the financial statements. Total external revenue reportedbyoperating segments shall constituteat least seventy-five (75) percent of the revenue of the Group. Operating segments identified as reportable segments in the current financial year in accordance with the quantitative thresholds would result in a restatement of prior period segment data for comparative purposes. 4.21 Fair value measurements The fair value of an asset or a liability except for lease transactions is determined as 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. The fair value measurement method assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market. The Group measures the fair value of an asset or a liability by taking into account the characteristics of the asset or liability if market participants would take these characteristics into account when pricing the asset or liability. The Group has considered the following characteristics when determining fair value: (a) The condition and location of the asset; and (b) Restrictions, if any, on the sale or use of the asset. The fair value measurement for a non-financial asset takes into account the ability of the market participant to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The fair value of a financial or non-financial liability or an entity’s own equity instrument assumes that: (a) A liability would remain outstanding and the market participant transferee would be required to fulfil the obligation. The liability would not be settled with the counterparty or otherwise extinguished on the measurement date; and (b) An entity’s own equity instrument would remain outstanding and the market participant transferee would take on the rights and responsibilities associated with the instrument. The instrument would not be cancelled or otherwise extinguished on the measurement date.