MKH Annual Report 2019

105 M K H B e r h a d 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D) (a) Statement of compliance (Cont’d) Impact of initial application of MFRS 9 Financial Instruments (Cont’d) Classification and measurement of financial liabilities With regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under MFRS 139, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss. The application of MFRS 9 has had no impact on the classification and measurement of the Group’s and the Company’s financial liabilities as the Group and the Company have no financial liabilities designated at FVTPL. Disclosures in relation to the initial application of MFRS 9 There were no financial assets or financial liabilities which the Group and the Company had previously designated as at FVTPL under MFRS 139 that were subject to reclassification or which the Group and the Company have elected to reclassify upon the application of MFRS 9. There were no financial assets or financial liabilities which the Group and the Company have elected to designate as at FVTPL at the date of initial application of MFRS 9. The application of MFRS 9 has had no impact on the financial statements of the Group and the Company. Impact of initial application of MFRS 15 Revenue from Contract with Customers MFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. MFRS 15 supersedes the current revenue recognition guidance including MFRS 118 Revenue , MFRS 111 Construction Contracts and the related interpretation. The core principle of MFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition. Step 1 : Identify the contract(s) with a customer Step 2 : Identify the performance obligations in the contract Step 3 : Determine the transaction price Step 4 : Allocate the transaction price to the performance obligations in the contract Step 5 : Recognise revenue when (or as) the entity satisfies a performance obligation NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019