AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 116 2.2 Standards, Amendments toMFRSs and Issues Committee Interpretations (“IC Intrepretation”) in issue but not yet efective At the date of the authorisation for issue of these inancial statements, the new and revised Standards and Amendments which were in issue but not yet efective and not early adopted by the Group and the Fund are as listed below: MFRS 16 Leases 1 MFRS 17 Insurance Contracts 3 Amendments to MFRS 9 Prepayment Features with Negative Compensation 1 Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures 1 Amendments to MFRSs Annual Improvements to MFRSs 2015 - 2017 Cycle 1 MFRSs Amendments to References to the Conceptual Framework in MFRS Standards 2 Amendments to MFRS 3 Deinition of a Business 2 Amendments to MFRS 101 and MFRS 108 Deinition of Material 2 Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 4 IC Interpretation 23 Uncertainty over Income Tax Payments 1 1 Efective for annual periods beginning on or after 1 January 2019 2 Efective for annual periods beginning on or after 1 January 2020 3 Efective for annual periods beginning on or after 1 January 2021 4 Efective date deferred to a date to be announced by MASB The Manager anticipates that the abovementioned Standards and Amendments will be adopted in the annual inancial statements of the Group and of the Fund when they become efective and that the adoption of these Standards and Amendments will have no material impact on the inancial statements of the Group and of the Fund in the period of initial application except as discussed below: MFRS 16 Leases MFRS 16 introduces a comprehensive model for the identiication of lease arrangements and accounting treatments for both lessors and lessees. MFRS 16 will supersede the current lease guidance including MFRS 117 Leases and the related interpretations when it becomes efective. MFRS 16 distinguishes leases and service contracts on the basis of whether an identiied asset is controlled by a customer. Distinction of operating leases (of balance sheet) and inance leases (on balance sheet) are removed for lessee accounting and is replaced by a model where a right-of-use asset and a corresponding liability have to be recognised for all leases by lessees (i.e. all on balance sheet) except for short-term leases and leases of low value assets. The right-of-use asset is initially measured at cost and subsequently measure at cost (subject to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modiications, amongst others. Furthermore, the classiication of cash lows will also be afected as operating lease payments under MFRS 117 are presented as operating cash lows, whereas under the MFRS 16 model, the lease payments will be split into a principal and an interest portion which we be presented as inancing and operating cash lows respectively. In contrast to lessee accounting, MFRS 16 substantially carries forward the lessor accounting requirements in MFRS 117, and continues to require a lessor to classify a lease either as an operating lease or a inance lease. Furthermore, extensive disclosures are required by MFRS 16. The Manager has undertaken a review of the impact of the adoption of MFRS 16 and has concluded that the adoption of this Standard will not have a material impact on the amounts reported and disclosures in the inancial statements.