Asia Media Annual Report 2017

ASIA MEDIA GROUP BERHAD Annual Report 2017 71 2. Basis of Preparation (cont’d) (a) Statement of compliance (cont’d) Standards issued but not yet effective (cont’d) (i) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) (cont’d) MFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. 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 required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in MFRS 139. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. MFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under MFRS 139. MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model (“ECL”) is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Group and Company has reviewed its financial assets and liabilities and is expecting the following impact of adoption of the new standard on 1 January 2018: • The new impairment model requiring recognition of impairment provisions to be based on ECL rather than only retrospective provisioning of credit losses as in this case under MFRS 139. It applies to financial assets classified at amortised cost. Based on the assessments taken to date, the Group expects an insignificant impact on the loss allowance for trade receivables. NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2017 (cont’d)