Malaysia Issues Amendments to Standards and a New Interpretation

The Malaysian Accounting Standards Board (MASB) has issued amendments to the Malaysian Financial Reporting Standards (MFRS) and the Financial Reporting Standards (FRS).

 

The Amendments to MFRS 136 are identical to the Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) issued by the International Accounting Standards Board (IASB).

 

The IASB made consequential amendments to some disclosure requirements in IAS 36 Impairment of Assets when it issued IFRS 13 Fair Value Measurement. However, one of the consequential amendments has resulted in the disclosure requirements being broader than intended.

 

Instead of requiring the disclosure of the recoverable amount for impaired assets, the consequential amendment requires an entity to disclose the recoverable amount of any cash-generating unit with a significant carrying amount of goodwill or intangible assets with indefinite useful lives regardless if there is any impairment loss recognised.

 

The amendment addresses this unintended disclosure requirement by clarifying that recoverable amount (determined based on fair value less costs of disposal) is required to be disclosed only when an impairment loss is recognised or reversed. In addition, there are new disclosure requirements about fair value measurement when impairment or reversal of impairment is recognised.

 

The amendments are to be applied retrospectively for annual periods beginning on or after 1 January 2014. Earlier application is permitted for periods when an entity applies MFRS 13.

 

Similar amendments are also made to FRS 136 Impairment of Assets in a document entitled “Recoverable Amount Disclosures for Non-Financial Assets (Amendments to FRS 136)”.

 

Novation of Derivatives and Continuation of Hedge Accounting (Amendments to MFRS 139)
The Amendments to MFRS 139 are identical to the Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) issued by the IASB.

 

The amendments provide relief from discontinuing hedge accounting in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met (in this context, a novation indicates that parties to a contract agree to replace their original counterparty with a new one).

 

This relief has been introduced in response to legislative changes across many jurisdictions that would lead to the widespread novation of over-the-counter derivatives. These legislative changes were prompted by a G20 commitment to improve transparency and regulatory oversight of over-the-counter derivatives in an internationally consistent and non-discriminatory way.

 

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

 

Similar amendments are also made to FRS 139 Financial Instruments: Recognition and Measurement in a document entitled “Novation of Derivatives and Continuation of Hedge Accounting (Amendments to FRS 139)”.

 

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