2) BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
(Cont’d)
Standards issued but not yet effective
(Cont’d)
The Group and the Company will adopt the above pronouncements where applicable when they
become effective in the respective financial periods. These pronouncements are not expected to
have any effect on the financial statements of the Company upon their initial application, except
as described below:
MFRS 9 Financial Instruments
In November 2014, MASB issued the complete version of MFRS 9 replacing MFRS 139. MFRS 9
retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary
measurement categories for financial assets: amortised cost, fair value through profit or loss and
fair value through other comprehensive income (“OCI”). The basis of classification depends on
the entity’s business model and the contractual cash flow characteristics of the financial asset.
Investments in equity instruments are always measured at fair value through profit or loss with an
irrevocable option at inception to present changes in fair value in OCI (provided the instrument is
not held for trading). A debt instrument is measured at amortised cost only if the entity is holding
it to collect contractual cash flows and the cash flows represent principal and interest.
For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised
cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main
change is that, in cases where the fair value option is taken for financial liabilities, the part of a
fair value change due to an entity’s own credit risk is recorded in other comprehensive income
rather than the income statement, unless this creates an accounting mismatch.
There is now a new expected credit losses model on impairment for all financial assets that
replaces the incurred loss impairment model used in MFRS 139. The expected credit losses
model is forward-looking and eliminates the need for a trigger event to have occurred before
credit losses are recognised.
The Group and the Company are currently assessing the impact of the adoption of this standard
in relation to the new requirements for classification, measurement and impairment.
3) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The operations of the Group are subject to a variety of financial risks, including market risk
(including foreign currency exchange risk and interest rate risk), credit risk and liquidity risk.
The Group has formulated a financial risk management framework whose principal objective is
to minimise the Group’s exposure to risks and/or costs associated with the financing, investing
and operating activities of the Group.
Market risk
Market risk is the risk that changes in market prices, and other prices will affect the Group’s
financial position and cash flows.
Asia Media Group Berhad Annual Report 2014
79
NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
