2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.1 Basis of preparation (continued) (a) Statement of compliance (continued) The relevant new accounting standards, annual improvements and amendments to published standards and interpretations to existing accounting standards that are effective for the Group and the Bank’s financial year beginning on or after 1 January 2024 are as follows: (continued) • Amendments to MFRS 16 “Lease liability in a Sale and Leaseback’ The amendments specify the measurement of the lease liability arises in a sale and leaseback transaction that satisfies the requirements in MFRS 15 “Revenue from Contracts with to be accounted for as a sale. In accordance with the amendments, the seller-lessee shall determine the “lease payments” or “revised lease payments” in a way that it does not result in the seller-lessee recognising any amount of the gain or loss that relates to the right-of-use it retains. The adoption of the above accounting standards, annual improvements and amendments do not give rise to any material financial impact to the Group and the Bank. Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective; • Amendments to MFRS 121 ‘Lack of exchangeability’ – effective 1 January 2025 The amendments clarify that a currency is exchangeable when an entity is able to exchange it into another currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism that creates enforceable rights and obligations. If an entity can only obtain no more than an insignificant amount of the other currency at the measurement date for the specified purpose, then the currency is not exchangeable. In such cases, the entity is required to estimate the spot exchange rate at the measurement date. The amendments do not specify how an entity estimates the spot exchange rate, but permit an entity to use observable exchange rate without adjustment or another estimation technique, provided it could meet the objective for estimating the spot exchange rate set out in the amendments. • Amendments to the Classification and Measurement of Financial Instruments – Amendments to MFRS 9 and MFRS 7 – effective 1 January 2026 The amendments include the following: i. Clarify the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system; ii. Clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal and profit income (‘SPPI’) criterion; iii. Add new disclosures for certain instruments with contractual terms that can change cash flows (such as some financial instruments with features linked to the achievement of environment, social and governance targets); and iv. Update the disclosures for equity instruments designated at fair value through other comprehensive income (‘FVOCI’). 293 w w w . b a n k i s l a m. c o m 01 02 03 04 05 06 07 08 FINANCIAL STATEMENTS 09
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