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Notes to the
Financial Statements
As at 31 March 2020
Fima CORPORATION Berhad
(197401004110)
(21185-P)
• Annual Report 2020
137
2.
Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(u) Leases (cont’d.)
Accounting policies applied from 1 April 2019 (cont’d.)
(i) As lessee (cont’d.)
Right-of-use assets (cont’d.)
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful
lives of the right-of-use assets are determined on the same basis as those of plant and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurement of
the lease liability.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments (including in
substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index
or a rate, and amounts expected to lease payments that depend on an index or a rate, and amounts expected to
be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease
term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an
index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which
the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments
resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment
of an option to purchase the underlying asset.
(ii) As lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an
asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the
lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.