Affin Bank Berhad | Annual Report 2020

241 AFFIN BANK BERHAD 197501003274 (25046-T) | ANNUAL REPORT 2020 (A) BASIS OF PREPARATION (CONTINUED) Standards, amendments to published standards and interpretations that are early adopted (continued) On adoption of the MFRS 16 amendment, the Group and the Bank are not required to assess whether a Covid-19 related rent concession that meets all of the following conditions is a lease modification: (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The Group and the Bank account for such Covid-19 related rent concession as a variable lease payment in the period(s) in which the event or condition that triggers the reduced payment occurs. The amendments shall be applied retrospectively. Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective • Annual Improvements to MFRS 9 ‘Fees in the 10% Test for Derecognition of Financial Liabilities’ (effective 1 January 2022) clarifies that only fees paid or received between the borrower and the lender, including the fees paid or received on each other’s behalf, are included in the cash flow of the new loan when performing the 10% test. An entity shall apply the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. • Amendments to MFRS 3 ‘Reference to Conceptual Framework’ (effective 1 January 2022) replace the reference to ‘Framework for Preparation and Presentation of Financial Statements’ with 2018 ‘Conceptual Framework for Financial Reporting’. The amendments did not change the current accounting for business combinations on acquisition date. The amendments provide an exception for the recognition of liabilities and contingent liabilities should be in accordance with the principles of MFRS 137 ‘Provisions, Contingent Liabilities And Contingent Assets’ and IC Interpretation 21 ‘Levies’ when falls within their scope. It also clarifies that contingent assets should not be recognised at the acquisition date. The amendments shall be applied prospectively. • Amendments to MFRS 116 ‘Proceeds Before Intended Use’ (effective 1 January 2022) prohibit an entity from deducting from the cost of a property, plant and equipment the proceeds received from selling items produced by the property, plant and equipment before it is ready for its intended use. The sales proceeds should instead be recognised in profit or loss. The amendments also clarify that testing whether an asset is functioning properly refers to assessing the technical and physical performance of the property, plant and equipment. The amendments shall be applied retrospectively. • Amendments to MFRS 137 ‘Onerous Contracts - Cost of Fulfilling a Contract’ (effective 1 January 2022) clarify that direct costs of fulfilling a contract include both the incremental cost of fulfilling the contract as well as an allocation of other costs directly related to fulfilling contracts. The amendments also clarify that before recognising a separate provision for an onerous contract, impairment loss that has occurred on assets used in fulfilling the contract should be recognised. The amendments shall be applied retrospectively. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020