2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.3 Summary of significant accounting policies (cont’d.) (w) Repairs and maintenance Repairs and maintenance costs are recognised in the income statement in the period they are incurred. (x) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, being within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s and the Corporation’s cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows. (y) Equity instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. The consideration paid, including attributable transaction costs on repurchased ordinary shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in income statement on the sale, reissuance or cancellation of treasury shares. Consideration paid or received is recognised directly in equity. (z) Fair value measurements 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 measurement 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. (i) Financial instruments The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business at the end of reporting date. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include: - using recent arm’s length market transactions; - reference to the current fair value of another instrument that is substantially the same; and - discounted cash flow analysis or other valuation models. 2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.3 Summary of significant accounting policies (cont’d.) (z) Fair value measurements (cont’d.) (ii) Non-financial assets For a non-financial asset, the fair value measurement takes into account a market participant’s ability 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. When measuring the fair value of an asset or a liability, the Group and the Corporation use observable market data as far as possible. Fair value is categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows: • Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities. • Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable input). The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer. 2.4 Pronouncements not yet in effect The following pronouncements that have been issued by the MASB will become effective in future financial reporting periods and have not been adopted by the Group and the Corporation: Effective for annual periods beginning on or after 1 January 2022 • Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to MFRS Standards 2018 - 2020) • Amendments to MFRS 3: Business Combinations (Reference to the Conceptual Framework) • Amendments to MFRS 9: Financial Instruments (Annual Improvements to MFRS Standards 2018 - 2020) • Amendments to MFRS 116: Property, Plant and Equipment (Property, Plant and Equipment−Proceeds before Intended Use) • Amendments to MFRS 137: Provisions, Contingent Liabilities and Contingent Assets (Onerous Contracts−Cost of Fulfilling a Contract) • Amendments to MFRS 141: Agriculture (Annual Improvements to MFRS Standards 2018 - 2020) NOTES TO THE FINANCIAL STATEMENTS 31 December 2021 NOTES TO THE FINANCIAL STATEMENTS 31 December 2021 MISC Berhad 336 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 337 FINANCIAL STATEMENTS FINANCIAL STATEMENTS
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