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Notes to the
Financial Statements
As at 31 March 2020
Fima CORPORATION Berhad
(197401004110)
(21185-P)
• Annual Report 2020
133
2.
Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(n) Financial liabilities(cont’d.)
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
(i) Other financial liabilities
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or
loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(o) Provision for liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and the
amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer
probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the
effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where
appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage
of time is recognised as a finance cost.
(i) Warranty claim
The Group has contracts with government agencies for the supply of security and confidential documents. Under
these contracts, the Group provides warranty for after defect products claimable within 3 to 5 years from the point
of sales.
(p) Share capital
An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company
after deducting all of its liabilities. Ordinary shares are equity instruments.