NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2023 176 WE ARE KENANGA LEADERSHIP MESSAGE VALUE CREATION MODEL KENANGA INVESTMENT BANK BERHAD ANNUAL REPORT 2023 3. ACCOUNTING POLICIES (CONT’D.) 3.4 Material accounting policy information (cont’d.) (r) Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the date on which derivative contracts are entered into and are subsequently remeasured at their fair values. Fair values are obtained from quoted market prices in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and option pricing models, as appropriate. Derivative financial instruments are presented separately in the statements of financial position as assets (positive changes in fair values) and liabilities (negative changes in fair values). Any gains or losses arising from changes in the fair value of the derivatives are recognised immediately in profit or loss. (s) Income recognition The Group and the Bank recognise revenue from contracts with customers for the provision of services based on the five-step model as set out below: • Identify contract(s) with a customer. A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria that must be met. • Identify performance obligations in the contract. A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer. • Determine the transaction price. The transaction price is the amount of consideration to which the Group and the Bank expect to be entitled in exchange for transferring promised services to a customer, excluding amounts collected on behalf of third parties. • Allocate the transaction price to the performance obligations in the contract. For a contract that has more than one performance obligation, the Group and the Bank allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group and the Bank expect to be entitled in exchange for satisfying each performance obligation. • Recognise revenue when (or as) the Group and the Bank satisfy a performance obligation. The Group and the Bank satisfy a performance obligation and recognise revenue over time if the Group's and the Bank's performance: • Do not create an asset with an alternative use to the Group and the Bank, and have an enforceable right to payment for performance completed to-date; or • Create or enhance an asset that the customer controls as the asset is created or enhanced; or • Provide benefits that the customer simultaneously receives and consumes as the Group and the Bank perform.
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