ADDITIONAL RELIEF FOR FIRST-TIME ADOPTERS OF MFRSS
The Malaysian Accounting Standards Board (MASB) today issued amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards providing relief to first-time adopters that received below-market rate of interest loans from the government. Government loans with a below-market rate of interest under MFRS 120 Accounting for Government Grants and Disclosure of Government Assistance are measured at fair value on initial recognition.
The amendments add an exception to the retrospective application of MFRSs. First-time adopters are required to apply MFRS 120 prospectively to government loans at a below-market rate of interest existing at the date of transition to MFRSs. As a result, the corresponding benefit of such loan is not recognised as a government grant and first-time adopters shall use its previous carrying amount of the loan at the date of transition to MFRSs as the carrying amount of the loan in the opening MFRS statement of financial position.
However, first-time adopters may choose to apply MFRS 120 retrospectively if the necessary information was obtained at the time of initially accounting for that loan. The option is available on a loan-by-loan basis.
Similar amendments are also made to FRS 1 First-time Adoption of Financial Reporting Standards, i.e. Government Loans (Amendments to FRS 1).
The amendments are effective for annual periods beginning on or after 1 January 2013 and early application is permitted.
Copies of the amendments are available free of charge at MASB office and can be downloaded from MASB website (http://www.masb.org.my).
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