My EG Services Berhad Annual Report 2019

ANNUAL REPORT 2019 203 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2019 (CONT’D) FINANCIAL STATEMENTS 54. CHANGES IN ACCOUNTING POLICIES (CONT’D) Initial Application of MFRS 16 (cont’d) (a) Lessee Accounting (cont’d) The Group has used the following practical expedients in applying MFRS 16 for the first time:- • Applied a single discount rate to a portfolio of leases with reasonably similar characteristics; • Applied for the exemption not to recognise operating leases with a remaining lease term of less than 12 months as at 1 October 2018; • Excluded initial direct costs for the measurement of the right-of-use asset at the date of initial application; and • Used hindsight in determining the lease term where the lease contract contains options to extend or terminate the lease. For leases that were classified as finance leases, the Group has recognised the carrying amount of the leased asset and lease liability immediately before 1 October 2018 as the carrying amount of the right-of- use asset and the lease liability as at the date of initial application. The following table explains the difference between the operating lease commitments disclosed in the last financial year (determined under MFRS 117) and the lease liabilities recognised at 1 October 2018:- The Group The Company RM’000 RM’000 Operating lease commitments as at 30 September 2018 as disclosed in last financial period (Restated) 11,327 1,823 Discounted using the incremental borrowing rate as at 1 October 2018 10,367 857 Less: Reversal of prepayments made for leasehold land due to contract temporarily terminated (5,382) - Lease liabilities recognised as at 1 October 2018 4,985 857 (b) Lessor Accounting The Group did not make any adjustments to the accounting for assets held as lessor under operating leases as a result of the adoption of MFRS 16. There were no financial impacts to the Group’s and the Company’s retained earnings as at 1 October 2018.