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financiAL STATEMENTs
Annual Report 2017
111
NOTES TO THE FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)
2.3 Summary of Significant Accounting Policies (Cont’d.)
(s) Foreign Currencies (Cont’d.)
(iii) Foreign Operations
The results and financial position of foreign operations that have a functional currency different from the
presentation currency, RM, of the consolidated financial statements are translated into RM as follows:
-
Assets and liabilities for each statement of financial position presented are translated at the closing rate
prevailing at the reporting date;
-
Income and expenses for each profit or loss are translated at average exchange rates for the year, which
approximates the exchange rates at the dates of the transactions; and
-
All resulting exchange differences are taken to the foreign currency translation reserve within equity.
(t)
Employee Benefits
(i)
Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which
the associated services are rendered by employees of the Group and of the Company. Short term accumulating
compensated absences such as paid annual leave are recognised when services are rendered by employees
that increase their entitlement to future compensated absences. Short term non-accumulating compensated
absences such as sick leave are recognised when the absences occur.
(ii) Defined contribution plan
As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees
Provident Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred.
(iii) Defined benefit plan
The foreign subsidiary in Indonesia, operates an unfunded, defined benefit Retirement Benefit Scheme (“the
Scheme”) for its eligible employees. The foreign subsidiary’s obligation under the Scheme, calculated using
the Projected Unit Credit Method, is determined based on actuarial assumptions by independent actuaries,
through which the amount of benefit that employees have earned in return for their services in the current and
prior years is estimated. That benefit is discounted in order to determine its present value. Actuarial gains and
losses are recognised immediately through other comprehensive income in order for the net pension assets or
liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or
surplus. Past service costs are recognised immediately to the extent that the benefits are already vested, and
otherwise are amortised on a straight-line basis over the average period until the amended benefits become
vested.
The amount recognised in the statement of financial position represents the present value of the defined benefit
obligations adjusted for unrecognised past service costs, and reduced by the fair value of plan assets. Any
asset resulting from this calculation is limited to the net total of any past service costs, and the present value of
any economic benefits in the form of refunds or reductions in future contributions to the plan.