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2014, Apr 16

Malaysia Issues Amendments to Standards and a New Interpretation

Malaysia Issues Amendments to Standards and a New Interpretation

by CFO Innovation Asia Staff, 09 September 2013

 

IC Interpretation 21 Levies
IC Interpretation 21 is identical to IFRIC Interpretation 21 Levies issued by the IASB.

 

The Interpretation is issued in response to the question on when an entity should recognise a liability to pay a levy if that liability is within the scope of MFRS 137 Provisions, Contingent Liabilities and Contingent Assets. The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. For example, if the activity that triggers the payment of the levy is the generation of revenue in the current period and the calculation of that levy is based on the revenue that was generated in a previous period, the obligating event for that levy is the generation of revenue in the current period. The generation of revenue in the previous period is necessary, but not sufficient, to create a present obligation.

 

The Interpretation also clarifies that the liability to pay a levy is recognised progressively if the obligating event occurs over a period of time. If an obligation to pay a levy is triggered when a minimum threshold is reached, the liability to pay a levy is recognised when that minimum activity threshold is reached.

 

The Interpretation is to be applied retrospectively for annual periods beginning on or after 1 January 2014. Earlier application is permitted.

 

Similar Interpretation is also issued as IC Interpretation 21 Levies in FRS Framework.
 

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