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2.
Summary of significant accounting policies (cont’d.)
2.3 Standards issued but not yet effective (cont’d.)
MFRS 15 Revenue from Contracts with Customers (cont’d.)
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the goods
or services underlying the particular performance obligation is transferred to the customer.
Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early
adoption permitted.
The Group has established a project team, with assistance from the various lines of business and finance management to
evaluate the potential impact of adopting this standard. The implementation efforts included the scoping of material revenue
streams, analysis of underlying contracts, business unit discussion to further assess specific contracts and products and the
development of updated disclosures. The project team has completed the scoping of material revenue streams and based on
the completed contracts reviews to date, the potential changes in revenue recognition for those contracts are not expected to
result in a material impact to the Group upon adoption.
Approximately 90% of the Group’s revenue comprising passenger seat sales, baggage fees, surcharges and fees and other
revenue will be covered under MFRS 15. In assessing the revenue recognition and measurement under MFRS 15, the principles
currently applied by the Group are largely consistent with the requirements of MFRS 15. Other than the enhanced disclosures
required, the Group does not anticipate significant changes to the recognition andmeasurement of revenue upon the application
of MFRS 15. The project team is developing additional quantitative and qualitative disclosures that will be required upon the
adoption of the new revenue recognition standard.
MFRS 9 Financial Instruments
MFRS 9 introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is
effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application
is required, but comparative information is not compulsory. The Group has established a MFRS 9 project team sponsored by
Group Chief Financial Officer to plan and manage the implementation of MFRS 9.
The Group has performed a detailed impact assessment of all three aspects of MFRS 9. The assessment is based on currently
available information and may be subject to changes arising from further reasonable and supportable information being made
available to the Group in 2018 when the Group adopts MFRS 9.
Basedon the analysis of theGroup’s financial assets and liabilities as at 31 December2017on thebasis of facts and circumstances
that exist at that date, the directors of the Company have assessed the impact of MFRS 9 to the Group’s financial statements
as follows:
(i)
Classification and measurement
The Group does not expect a significant impact on its balance sheet or equity on applying the classification and
measurement requirements of MFRS 9. It expects to continue measuring at fair value all financial assets currently held
at fair value. Quoted equity shares currently held by the Group are disclosed as available-for-sale (AFS) which fair value
through other comprehensive income (FVOCI) election is available. Accordingly, the Group does not expect the new
guidance to affect the classification and measurement of these financial assets. However, gains or losses realised on the
sale of financial asset at FVOCI will no longer be transferred to profit or loss on sale, but instead reclassified below the
line from the FVOCI reserve to retained earnings.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
[ ]
AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS
250