MFRS 16 Disclosure Guide 110919

Guide to Drafting
MFRS 16 Disclosures
For MFRS preparers applying the simplified

retrospective transition method
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About this disclosure guide on MFRS 16 – a new era of lease accounting
The new MFRS 16 “Leases”, effective for annual reporting periods beginning on or after 1 January 2019
adds significant new, enhanced disclosures for both lessees and lessors. This disclosure guide explains
the MFRS 16 presentation and disclosure requirements and provides guidance to preparers on how to
address these requirements in the first year of adoption of MFRS 16 in 2019. Guidance notes are added
where applicable to provide insights on the requirements.
Disclosure objective of MFRS 16

The objective of the MFRS 16 disclosure requirements is for lessees and lessors to disclose information in
the notes that, together with the information provided in the statement of financial position, statement of
profit or loss and statement of cash flows, gives a basis for users of financial statements to assess the
effect that leases have on the financial position, financial performance and cash flows of the lessees and
the lessors.
Other than quantitative information, entities are required to disclose qualitative information about its leasing
activities necessary to meet the disclosure objective of MFRS 16. It is therefore important for an entity to
consider the disclosure objective and requirements of the standard when determining the level of detail
required to be disclosed on leasing activities in the financial statements.
Transition disclosures upon adoption of MFRS 16

MFRS 16 provides various transitions expedients and exemptions. Entities shall explain the transition
method used as well as practical expedients applied in its first set of annual financial statements where
MFRS 16 is adopted. The reporting entity in this disclosure guide is a group with 31 December year end,
adopting MFRS 16 for the first time in its annual financial statement ending 31 December 2019 by applying
the simplified retrospective transition method. Date of initial application is therefore 1 January 2019. .
Tips to using this disclosure guide

(i) Black fonts indicate where specific disclosures are typically located in financial statements.
(ii) Orange fonts provide specific guidelines on the disclosure requirements. Preparers are encouraged
to refer to the specific requirements in MFRS 16 when drafting the disclosures. References to MFRS
16 requirements are provided in the reference column on the left.
(iii) Icons in orange box indicates some useful tips for preparers to consider while drafting the
relevant disclosures.
(iv) Examples of disclosures are shaded in grey.
This disclosure guide is for general information purposes only, and should not be used as a substitute for
consultation with professional advisors.
The illustrative disclosures in this disclosure guide should not be considered the only acceptable form of
presentation. Alternative presentations to those proposed in this disclosure guide may be equally
acceptable so long as they meet the objective of disclosure requirements prescribed in MFRS 16.
STRUCTURE OF THIS DISCLOSURE GUIDE
Page
Notes to the financial statements
1 Basis of preparation (extract) ............................................................................................................. 1
2 Changes in accounting policies upon adoption of MFRS 16 ............................................................. 1
3 Significant accounting policies
3.1 Leases in which the Group is a lessee

(a) Lease term ......................................................................................................................... 6
(b) Rights-of-use assets .......................................................................................................... 7
(c) Lease liabilities ................................................................................................................... 8
(d) Reassessment of lease liabilities ....................................................................................... 9
(e) Short-term leases and leases of low-value assets .......................................................... 10
3.2 Leases in which the Group is a lessor

(a) Finance leases ................................................................................................................. 11
(b) Operating leases .............................................................................................................. 11
(c) Sublease classification ..................................................................................................... 12
(d) Separating lease and non-lease components .................................................................. 12
4 Critical accounting estimates and significant judgements ............................................................... 13
5 Disclosures – Lessee ...................................................................................................................... 14
6 Disclosures – Lessor ....................................................................................................................... 25
7 Appendix – MFRS 16 disclosure checklist ...................................................................................... 29

MFRS 16 Disclosure Guide
Notes to the financial statements
1. BASIS OF PREPARATION (EXTRACT)
MFRS 108.28(a), 1.1 New and amended standards adopted by the Group
(b)
 To disclose the fact about the adoption of new accounting policies upon initial
application of MFRS 16 and make reference to the note disclosing the impacts
of the change.
MFRS 16.C5(b) Example
The Group has adopted MFRS 16 for the first time in the 2019 financial
statements with the date of initial application (“DIA”) of 1 January 2019 by
applying the simplified retrospective transition method.
The practical expedients elected and the detailed impacts of the changes in
accounting policies on leases are disclosed in Note 2. The details of the
accounting policies on leases are disclosed separately in Note 3.
MFRS 108.28(c) 2. CHANGES IN ACCOUNTING POLICIES UPON ADOPTION OF MFRS 16
 To disclose the effects of the change in accounting policy e.g. explain how lease
contracts were accounted for previously in the comparative periods and how the
adoption of MFRS 16 has changed those accounting.
MFRS 108.28(d)  To disclose the transition method that an entity has adopted.
MFRS 16.C4  To disclose the fact if the entity applies the practical expedient on definition of a
lease.
Example
During the financial year, the Group changed its accounting policies on leases
upon adoption of MFRS 16. The Group has elected to use the simplified
retrospective transition method and to apply a number of practical expedients as
provided in MFRS 16.
Under the simplified retrospective transition method, the 2018 comparative

information was not restated and the cumulative effects of initial application of MFRS
16 where the Group is a lessee were recognised as an adjustment to the opening
balance of retained earnings as at 1 January 2019. The comparative information
continued to be reported under the previous accounting policies governed under
MFRS 117 “Leases” and IC Int. 4 “Determining whether an Arrangement Contains a
Lease”.
As a lessor, the Group is not required to make any adjustment on transition, except
for the reassessment of existing operating subleases at the DIA.
In addition, the Group has elected not to reassess whether a contract is, or contains
a lease at the DIA. Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying MFRS 117 and IC Int. 4. [GN1]
1
Notes to the financial statements (continued)
2. CHANGES IN ACCOUNTING POLICIES UPON ADOPTION OF MFRS 16
(CONTINUED)
MFRS 16.C3, C4 Key consideration [GN1]

As an optional practical expedient, both lessor and lessee can, at the DIA, opt
not to reassess whether an existing contract is, or contains, a lease in
accordance with MFRS 16. Accordingly, entities need not apply MFRS 16 to
existing contracts that did not meet the definition of a lease under MFRS 117 /
IC 4, although these contracts meet the definition of lease under MFRS 16. This
practical expedient should be consistently applied to all contracts.
MFRS 108.28(d),  To disclose the fact if the lessee has applied any of the other optional practical
MFRS 16.C10, expedients on a lease-by-lease basis.
C13
Example
The Group as a lessee
(a) Leases classified as operating leases under MFRS 117
MFRS 16.C8(a) On adoption of MFRS 16, the Group recognised lease liabilities in relation to leases
which had previously been classified as ‘operating leases’ under the principles of
MFRS 117. These liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee’s incremental borrowing rate as of 1
January 2019.
The associated right-of-use (“ROU”) assets for property leases were measured on a
retrospective basis as if the new requirements has always been applied. Other ROU
assets were measured at the amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments relating to that lease recognised
in the statement of financial position as at 31 December 2018. [GN2]
MFRS 16.C8(b)
Key consideration [GN2]
Under the simplified retrospective transition method,
 a lessee can choose (on a lease-by-lease basis) one of the alternative
below to measure the ROU asset:
o retrospective calculation, using a discount rate based on lessee’s
incremental borrowing rate at the DIA; or
o using an amount equal to the lease liability and adjusted by the amount
of any previously recognised prepaid or accrued lease payments
related to that lease recognised prior to the DIA.
MFRS 16.C8(c)  ROU asset is subject to impairment indicator assessment under MFRS 136
“Impairment of Assets” at the DIA (unless an entity elects to apply the practical
expedient on onerous provision under MFRS 137 “Provisions, Contingent
Assets and Contingent Liabilities” as permitted in MFRS 16.C10(b)).
MFRS 16.C10 In applying MFRS 16 for the first time, the Group has applied the following practical
expedients permitted by the standard to leases previously classified as operating
leases under MFRS 117:
 the use of a single discount rate to a portfolio of leases with reasonably similar
characteristics;
 reliance on previous assessments on whether leases are onerous;
 the accounting for operating leases with a remaining lease term of less than 12
months as at 1 January 2019 as short-term leases;
 the exclusion of initial direct costs for the measurement of the ROU asset at the
DIA; and
 the use of hindsight in determining the lease term where the contract contains
options to extend or terminate the lease.
2
(CONTINUED)
MFRS 16.C19 The Group had also derecognised the asset or liability related to favourable or
unfavourable terms of an operating lease acquired as part of a business combination
and adjusted the carrying amount of the ROU asset with the same amount at the DIA.
(b) Leases classified as finance leases under MFRS 117
MFRS 16.C11 For leases previously classified as finance leases and presented as a part of
‘property, plant and equipment’, the Group recognised the carrying amount of the
lease asset and lease liability immediately before transition which were measured
applying MFRS 117 as the carrying amount of the ROU asset and the lease liability
at the DIA.
MFRS 16.C14  The lessor is not required to make any adjustment on transition, except for the
reassessment of lease classification of operating subleases at the DIA. [GN3]
MFRS 16.C15
 At the DIA, an intermediate lessor shall,
o reassess operating subleases on the basis of the remaining contractual terms
and conditions of the head lease and sublease at that date; and
o for subleases that were classified as operating leases applying MFRS 117,
but finance lease applying MFRS 16, account for the sublease as a new
finance lease entered into at the DIA.
MFRS 16.BC290 Subleases that were classified by an intermediate lessor as operating leases
applying MFRS 117 may be classified as finance lease applying MFRS 16. This is
because MFRS 16 requires an intermediate lessor to evaluate the classification of
a sublease by reference to the ROU asset arising from the head lease and not by
reference to the underlying assets as was required by MFRS 117.
Example
The Group as a lessor
Under MFRS 16, the Group (acting as a sub-lessor) is required to assess the lease
classification of a sublease with reference to the ROU asset, not the underlying
asset. On transition, the Group reassessed the lease classification of a sublease
contract previously classified as an operating lease under MFRS 117. The Group
concluded that the sublease is a finance lease under MFRS 16 and the sublease
contract was accounted for as a new finance lease entered into at the DIA.
Accordingly, the Group derecognises the ROU asset related to the head lease, and
recognises a receivable at an amount equal to the net investment in the sublease.
The net impacts are presented as an adjustment to the opening balance of retained
earnings at the DIA. [GN4]
MFRS 16 is not explicit on where to present the net impacts of recognising a

finance sublease at the DIA. Since the effects are related to initial application of
MFRS 16, we believe that it is appropriate to present the net impacts within the
retained earnings (or other component of equity, as appropriate).
In addition, the Group applied MFRS 15 “Revenue from Contracts with Customers”
to allocate the consideration in the contract to each lease and non-lease component.
3
(CONTINUED)
MFRS 16.C12  If a lessee elects to apply the simplified retrospective transition method, the
lessees shall disclose information about the initial application of MFRS 16
required by MFRS 108.28 (e.g. nature of the change in accounting policy, the
transitional provision adopted), except for information on the effects of the
change in accounting policy affecting each financial statement line items as
required by MFRS 108.28(f).
In addition, the lessee shall disclose:

o the weighted average lessee’s incremental borrowing rate applied to lease
liabilities recognised in the statement of financial position (“SOFP”) at the
DIA; and
o an explanation of any difference between:
 operating lease commitments disclosed applying MFRS 117 at the
end of the financial year immediately preceding the DIA, discounted
using the incremental borrowing rate at the DIA; and
 lease liabilities recognised in the SOFP at the DIA.
Example
(a) Adjustments as at 1 January 2019 [GN5]
As at 1 January 2019, the change in accounting policies has affected the following
items:
 property, plant and equipment – decrease by RMx,xxx
 ROU assets – increase by RMx,xxx
 deferred tax assets – increase by RMx,xxx
 prepayments – decrease by RMx,xxx
 borrowings – decrease by RMx,xxx
 lease liabilities – increase by RMx.xxx
The net impact on retained earnings on 1 January 2019 was a decrease of

RMx,xxx.
The voluntary disclosure stating the significant impacts at the DIA in a

summarised form as shown in the Example above could be useful to the users
of the financial statements.
4
(CONTINUED)
Example (continued)
(b) Measurement of lease liabilities on 1 January 2019
MFRS 16.12(a) The weighted average lessee’s incremental borrowing rate applied to the lease
liabilities on 1 January 2019 was xx% per annum.
MFRS 16.12(b) The reconciliation between the operating lease commitments disclosed applying
MFRS 117 at 31 December 2018 to the lease liabilities recognised at 1 January
2019 is as follows:
RM’000
Operating lease commitments disclosed as at
31 December 2018 x,xxx
Discounted using the lessee’s incremental borrowing
rate of at the DIA x,xxx
Add:
Finance lease liabilities recognised as at
31 December 2018 x,xxx
(Less):
Short-term leases recognised on a straight-line basis as
expense (xxx)
Low-value leases recognised on a straight-line basis as
expense (xxx)
Contracts reassessed as service agreements (xxx)
Add/(Less):
Adjustments as a result of a different treatment of
extension and termination options xx
Adjustments relating to changes in the index or rate
affecting variable payments xx
Lease liabilities recognised as at 1 January 2019 x,xxx
Of which are:
Current lease liabilities x,xxx
Non-current lease liabilities x,xxx
x,xxx
5
3. SIGNIFICANT ACCOUNTING POLICIES
Example disclosure below are for illustration only. Preparers should tailor the
relevant accounting policy disclosures based on the facts & circumstances
and terms of the lease contracts.
3.1 Leases in which the Group is a lessee
MFRS 101.117 To disclose the significant accounting policies on lessee accounting which may
include:
 Initial recognition and measurement of ROU assets and lease liabilities
 Subsequent measurement of ROU assets and lease liabilities
 Determination of lease term
 Reassessment of lease liabilities
Example
Accounting policies applied from 1 January 2019
MFRS 16.22 From 1 January 2019, leases are recognised as right-of-use (“ROU”) asset and a
corresponding liability at the date on which the leased asset is available for use by
the Group (i.e. the commencement date).
Contracts may contain both lease and non-lease components. The Group allocates
the consideration in the contract to the lease and non-lease components based on
their relative stand-alone prices. However, for leases of properties for which the
Group is a lessee, it has elected the practical expedient provided in MFRS 16 not
to separate lease and non-lease components. Both components are accounted for
as a single lease component and payments for both components are included in
the measurement of lease liability. [GN6]
MFRS 16.13 - A lessee shall allocate the considerations to the lease and non-lease
16 components based on relative stand-alone price (or estimates by maximising the
use of observable information, if stand-alone price is not readily available).
As a practical expedient, a lessee may elect, by class of underlying asset, not to
separate the lease and non-lease components, and instead account for both the
components as a single lease component.
(a) Lease term

MFRS 16.18 - In determining the lease term, the Group considers all facts and circumstances
20
that create an economic incentive to exercise an extension option, or not to
exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to
be extended (or not to be terminated).
MFRS 16.21, The Group reassess the lease term upon the occurrence of a significant event
B41 or change in circumstances that is within the control of the Group and affects
whether the Group is reasonably certain to exercise an option not previously
included in the determination of lease term, or not to exercise an option
previously included in the determination of lease term. A revision in lease term
results in remeasurement of the lease liabilities (refer to (d) below).
6
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.1 Leases in which the Group is a lessee (continued)
Example (continued)
The Group as a lessee (continued)
Accounting policies applied from 1 January 2019 (continued)
MFRS 16.23 - (b) ROU assets

25
ROU assets are initially measured at cost comprising the following:
 The amount of the initial measurement of lease liability;
 Any lease payments made at or before the commencement date less any
lease incentive received;
 Any initial direct costs; and
 Decommissioning or restoration costs.
MFRS 16.31, 32 ROU assets that are not investment properties are subsequently measured at
cost, less accumulated depreciation and impairment loss (if any). The ROU
assets are generally depreciated over the shorter of the asset’s useful life and
the lease term on a straight-line basis. If the Group is reasonably certain to
exercise a purchase option, the ROU asset is depreciated over the underlying
asset’s useful life. In addition, the ROU assets are adjusted for certain
remeasurement of the lease liabilities.
While the Group revalues land and building (presented as part of property,
plant and equipment) that it owns, it has chosen not to revalue the ROU
building held by the Group. [GN7]
The Group applies the fair value model to ROU assets that meet the definition
of investment property of MFRS 140 consistent with those investment property
owned by the Group. Refer to Note X for accounting policy on investment
property. [GN7]
MFRS 16.34, 35 In addition to the cost model as illustrated in the Example, there are 2 other
measurement models for ROU assets:
(a) A lessee that has elected to apply the fair value model to measure its
investment properties (“IP”) must also apply the fair value model to the
ROU assets that meet the definition of IP.
(b) A lessee that applies the revaluation model to a class of property, plant
and equipment (“PPE”) can choose to measure the corresponding class
of ROU asset under revaluation model. The election is by class of ROU
asset.
MFRS 16.47 The Group presents ROU assets that meet the definition of investment property
in the statement of financial position as investment property. ROU assets that
are not investment properties are presented as a separate line item in the
statement of financial position. [GN8]
7
Example (continued)
(b) ROU assets (continued)
MFRS 16.47(a) Key consideration [GN8]

 Entities are not required to present ROU assets as a separate line item in the
SOFP. A lessee can choose to present the ROU asset within which the
corresponding underlying assets would be presented if they were owned, and
disclose which line items in the SOFP include those ROU assets.
MFRS 16.48  ROU assets that meet the MFRS 140’s definition of IP must be presented in
the SOFP as IP.
(c) Lease liabilities
MFRS 16.26 - Lease liabilities are initially measured at the present value of the lease
28 payments that are not paid at that date. The lease payments include the
following:
 Fixed payments (including in-substance fixed payments), less any lease
incentive receivable;
 Variable lease payments that are based on an index or a rate, initially
measured using the index or rate as at the commencement date;
 Amounts expected to be payable by the Group under residual value
guarantees;
 The exercise price of a purchase and extension options if the group is
reasonably certain to exercise that option; and
 Payments of penalties for terminating the lease, if the lease term reflects
the Group exercising that option.
Lease payments are discounted using the interest rate implicit in the lease. If
that rate cannot be readily determined, which is generally the case for leases in
the Group, the lessee’s incremental borrowing is used. This is the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the ROU in a similar economic environment with similar
term, security and conditions.
MFRS 16.37
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for
each period.
MFRS 16.38(b) Variable lease payments that depend on sales are recognised in profit or loss in
the period in which the condition that triggers those payments occurs.
MFRS 16.47(b), The Group presents the lease liabilities as a separate line item in the statement
49 of financial position. Interest expense on the lease liability is presented within
the finance cost in the statement of profit or loss. [GN9]
8
Example (continued)
(c) Lease liabilities
 Entities are not required to present lease liabilities as a separate line item
in the SOFP. However, a lessee shall disclose which line items in the
SOFP include those liabilities.
 Lessee shall present interest expense on the lease liability that is not
capitalised as part of qualifying assets separately from the depreciation
charge for the ROU asset. Interest expense on the lease liability is a
component of finance costs, which MFRS 101 “Presentation of Financial
Statements” requires finance cost to be presented separately in the
statement of profit or loss and other comprehensive income.
(d) Reassessment of lease liabilities
MFRS 16.39
The Group is also exposed to potential future increases in variable lease
payments that depend on an index or rate, which are not included in the lease
liability until they take effect. When adjustments to lease payments based on an
index or rate take effect, the lease liability is remeasured and adjusted against
the ROU assets. [GN10]
MFRS 16.40 - A reassessment of the lease liability takes place if the cash flows change
43 based on the original terms and conditions, for example:
(a) A change in lease term due to the lessee exercises an option (purchase
/ termination / extension) in a different way than the entity had
previously determined was reasonably certain;
(b) A change in lease term due to an event occurs that contractually obliged
/ prohibits the lessee from exercise the option;
(c) A change in the amounts expected to be payable under a residual value
guarantee; or
(d) A change in future lease payments resulting from a change in an index
or rate used to determine those payments (as illustrated in Example
above).
For items (a) & (b) above, a lessee shall remeasure the lease liability by
discounting the revised lease payments using a revised discount rate. In
contrast, a lessee shall use an unchanged discount rate for items (c) & (d)
above (unless the change is due to a change in floating interest rate).
9
Example (continued)
(e) Short-term leases and leases of low-value assets
MFRS 16.60 Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT equipment and small items of office furniture. Payments
associated with short-term leases of equipment and vehicles and all leases of
low-value assets are recognised on a straight-line bases as an expense in
profit or loss. [GN11]
MFRS 16.8 The election for short-term leases shall be made by class of underlying asset
to which the ROU relates. The election for leases for which the underlying
asset is of low value can be made on a lease-by-lease basis.
MFRS 117 Accounting policies applied until 31 December 2018 [GN12]
Finance lease
Until 31 December 2018, leases of property, plant and equipment where the
Group, as lessee, has substantially all the risks and rewards of ownership were
classified as finance leases. Finance leases are capitalised at the lease’s
inception at the fair value of the leased property or, if lower, the present value of
the minimum lease payments. The corresponding rental obligations, net of
finance charges, are included in other short-term and long-term payables. Each
lease payment is allocated between the liability and finance cost. The finance
cost is charged to the profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each
period. The property, plant and equipment acquired under finance leases is
depreciated over the asset’s useful life or over the shorter of the asset’s useful
life and the lease term if there is no reasonable certainty that the Group will
obtain ownership at the end of the lease term.
Operating lease
Leases in which a significant (substantially all) portion of the risks and rewards of
ownership are not transferred to the Group as lessee are classified as operating
leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to profit or loss on a straight-line basis over the
period of the lease.
10
When an entity applies the simplified retrospective transition method, the

comparative information is not restated and continues to be reported under the
previous accounting policies on leases based on the principles in MFRS 117
and IC Int. 4. Accordingly, the pre-MFRS 16 accounting policies should
continue be disclosed in the 2019 financial statements when the entity first
applied MFRS 16, in addition to MFRS 16 accounting policies.
3.2 Leases in which the Group is a lessor
MFRS 101.117 To disclose the significant accounting policies on lessor accounting which may
include:
 Determination of finance or operating lease at lease inception
 Subsequent measurement of operating and finance leases
Example
The Group as a lessor

MFRS 16.61, 66 As a lessor, the Group determines at lease inception whether each lease is a finance
lease or an operating lease. To classify each lease, the Group makes an overall
assessment of whether the lease transfers substantially all of the risks and rewards
incidental to ownership of the underlying asset to the lessee. As part of this
assessment, the Group considers certain indicators such as whether the lease is for
the major part of the economic life of the asset.
(a) Finance leases
MFRS 16.62 The Group classifies a lease as a finance lease if the lease transfers substantially
all the risks and rewards incidental to ownership of an underlying asset to the
lessee.
MFRS 16.67, 77 The Group derecognises the underlying asset and recognises a receivable at an
amount equal to the net investment in a finance lease. Net investment in a finance
lease is measured at an amount equal to the sum of the present value of lease
payments from lessee and the unguaranteed residual value of the underlying asset.
Initial direct costs are also included in the initial measurement of the net investment.
The net investments is subject to MFRS 9 impairment (refer to Note X on impairment
of financial assets). In addition, the Group reviews regularly the estimated
unguaranteed residual value.
MFRS 16.75, 77 Lease income is recognised over the term of the lease using the net investment
method so as to reflect a constant periodic rate of return. The Group revises the
lease income allocation if there is a reduction in the estimated unguaranteed residual
value.
(b) Operating leases

MFRS 16.62 The Group classifies a lease as an operating lease if the lease does not transfer
substantially all the risks and rewards incidental to ownership of an underlying asset
to the lessee.
MFRS 16.81
The Group recognises lease payments received under operating lease as lease
income on a straight-line basis over the lease term.
11
3.2 Leases in which the Group is a lessor (continued)
(c) Sublease classification

MFRS 16.B58 Until the financial year ended 31 December 2018, when the Group was an
intermediate lessor, the subleases were classified as finance or operating leases by
reference to the underlying assets.
From 1 January 2019, when the Group is an intermediate lessor, it assesses the
lease classification of a sublease with reference to the ROU asset arising from the
head lease, not with reference to the underlying asset. If a head lease is short-term
lease to which the Group applies the exemption described above, then it classifies
the sublease as an operating lease.
(d) Separating lease and non-lease components

MFRS 16.17 If an arrangement contains lease and non-lease components, the Group allocates
the consideration in the contract to the lease and non-lease components based on
the stand-alone selling prices in accordance with the principles in MFRS 15.
12
4. CRITICAL ACCOUNTING ESTIMATES AND SIGNIFICANT JUDGEMENTS
MFRS 101.122,
 The accounting for leases under MFRS 16 involves making various judgements
125, 129 and estimates which may need to be disclosed. The level of detail provided
depends on the individual circumstances of the entity and the materiality of the
amounts involved. For example, an entity may explain how it applies the
judgment in the following areas :
a) How the entity has determined whether a contract is, or contains, a lease.
b) How the entity has determined the incremental borrowing rate, for example
where third party financing cannot be obtained (or can only be obtained at a
significant premium), or by adjusting rates to reflect the term, security, value
or economic environment.
c) What the entity considers to be an index or rate in determining lease
payments.
d) How the entity accounts for costs incurred in connection with a lease that
are not part of the cost of the ROU asset.
e) The interpretation of what constitutes a penalty in determining the lease
term. [GN13]
At the June 2019 meeting, the IFRS Interpretations Committee observed that when
determining the enforceable period of a cancellable or renewable lease, an entity
shall consider:
a) the broader economics of the contract, and not only contractual termination
payments. For example, if either party has an economic incentive not to terminate
the lease such that it would incur a penalty on termination that is more than
insignificant, the contract is enforceable beyond the date on which the contract
can be terminated; and
b) whether each of the parties has the right to terminate the lease without permission
from the other party with no more than an insignificant penalty.
Example – The Group as a lessee
Extension and termination options

MFRS 16.59(b)(ii), In determining the lease term, management considers all facts and
B50
circumstances that create an economic incentive to exercise an extension option,
or not to exercise a termination option. Extension options (or periods after
termination options) are only included in the lease term if the lease is reasonably
certain to be extended (or not terminated). Potential future cash outflows of
RMxxx have not been included in the lease liability because it is not reasonably
certain that the leases will be extended (or not terminated).
MFRS 16.20 The assessment is reviewed if a significant event or a significant change in

circumstances occurs which affects this assessment and that is within the control
of the lessee. During the current financial year, the financial effect of revising
lease terms to reflect the effect of exercising extension and termination options
was an increase in lease liabilities and ROU assets of RMxxx. Refer to Note 5
for details about the Group’s leases.
Residual value guarantees

MFRS
The Group initially estimates and recognises amounts expected to be payable
16.59(b)(iii), B51 under residual value guarantees as part of the lease liability. The amounts are
reviewed, and adjusted if appropriate, at the end of each reporting period. As at
31 December 2019, RMxxx is expected to be payable and is included in
calculating the lease liabilities while RMxxx is not expected to be payable and
has hence been excluded from the lease liabilities.
13
5. DISCLOSURES - LESSEE
MFRS 16.51  The objective of MFRS 16 disclosures is for lessee to disclose sufficient
information about its lease contracts for users of financial statements to
assess the effect of these contracts on the financial position, financial
performance and cash flows of the lessee.
MFRS 16.52,  A lessee shall disclose information about its leases for which it is a lessee in
B48(b)
a single note or separate section in its financial statements. However, a
lessee need not duplicate information that is already presented elsewhere in
the financial statements, provided that the information is incorporated by
cross-reference in the single note or separate section about leases.
MFRS 16.47(a),  Where a lessee has elected to present ROU assets within the same line
MFRS 116.73(e) item as the corresponding underlying assets would be presented if they
were owned, it should provide the same disclosures for the ROU assets as
for the corresponding underlying assets. For example, where the ROU
assets are presented as PPE, they would need to be included in the
reconciliation that is required under MFRS 116 “Property, Plant and
Equipment”, with the same amount of detail as is required for other items of
PPE.
 If ROU assets are measured at revalued amounts applying MFRS 116, the
MFRS 16.57
lessee shall also disclose the following information required by MFRS
116.77 for those ROU assets:
(a) Effective date of the revaluation;
(b) Whether an independent valuer was involved;
(c) Carrying amount that would have been recognised had the ROU assets
been carried under the cost model; and
(d) Revaluation surplus, indicating the change for the period and any
restriction on distribution of the balance to shareholders.
MFRS 16.55  Lessee who chooses to apply the short-term lease exemption in MFRS 16.6 is
not required to recognise any lease liability. Instead, the lessee shall
recognise the lease payments associated with short-term leases as an
expense. Accordingly, MFRS 16 requires such lessees to disclose the amount
of its short-term lease commitments if the portfolio of short-term lease
commitment at the end of the reporting period is dissimilar to the portfolio of
short-term leases for the current reporting period. This is because the amount
of lease expense for the next reporting period would be different from the
current reporting period.
MFRS 101.38 As a general rule, entities must provide comparative information in respect of the
preceding period for all amounts reported in the current period’s financial
statements. However, where a lessee has applied the simplified retrospective
transition method that is permitted under MFRS 16 it does not restate any
comparative information and the disclosures for the prior period should reflect the
accounting treatment applied in that period. Accordingly, such entities:
o shall retain the finance and operating lease disclosures for the prior year
period in accordance with MFRS 117 and IC Int. 4; and
o are not require to provide comparative information for the new MFRS 16
disclosures.
14
5. DISCLOSURES - LESSEE (CONTINUED)
5.1 Disclosures about the ROU assets, expenses and cash flows related to
leases
MFRS 16.53, 54,  MFRS 16 prescribes specific items of information that, if material, should be
BC217
disclosed by lessees to meet the information needs of users of financial
information. A lessee shall disclose these information in tabular format
unless another format is more appropriate.
Example

Information about ROU assets, expenses and cash flows related to leases
[GN14]
2019 2018
RM’000 RM’000
MFRS 16.53(j) Carrying amounts of ROU asset by class of underlying assets:[GN16]
Properties xx,xxx -
Equipment xx,xxx -
Others xx,xxx -
xx,xxx -
MFRS 16.53(h)
Additions to the ROU assets during the financial
year xx,xxxx -
MFRS 16.53(a) Depreciation charge of ROU assets by class of underlying assets(*):

Properties (x,xxx) -
Equipment (x,xxx) -
Others (x,xxx) -
(x,xxx) -
MFRS 16.53(b) Interest expense (*) (x,xxx) -

MFRS 16.53(c) Expense related to short-term leases [GN17] (x,xxx) -
(included in cost of goods sold and administrative
expenses) [GN18]
MFRS 16.53(d) Expense relating to lease of low-value assets that (x,xxx) -
are not shown above as short-term leases [GN17]
(included in administrative expenses) [GN18]
MFRS 16.53(e) Expense relating to variable lease payments not (x,xxx) -
included in the lease liabilities (included in
administrative expenses) [GN18]
MFRS 16.53(f) Income from subleasing ROU assets x,xxx -
MFRS 16.53(i) Gains arising from sale and leaseback transactions x,xxx -
MFRS 16.53(g) Total cash outflow for leases [GN19] xx,xxx -
MFRS 16.54 (*) The amount disclosed shall include depreciation / interest that have been
capitalised in the carrying amount of another asset during the financial year.
15
leases (continued)
Example (continued)
Information about ROU assets, expenses and cash flows related to leases
(continued)

MFRS 16.48, 56  If ROU assets meet the definition of IP, a lessee shall present the ROU
MFRS 140.74 assets in the SOFP as IP and apply the disclosure requirements in MFRS
140. In that case, a lessee is not required to disclose the following
information for those ROU assets:
o Depreciation charge by class of underlying assets (paragraph 53(a));
o Income from subleasing (paragraph 53(f));
o Additions (paragraph 53(h)); or
o Gains or loss from sale and leaseback transactions (paragraph 53(j)).
MFRS 16.51, Unlike MFRS 116, MFRS 16 does not mandate disclosure of the reconciliation
MFRS 101.112(c) of the ROU assets held. However, additional disclosures may be necessary to
explain significant changes in the amount of ROU assets, for example as a
result of foreign exchange movements or modifications to lease arrangements.

MFRS 16.53(c) The expenses related to short-term leases need not include the expense
relating to leases with a lease term of 1 month or less.
MFRS 16.53(d) The expenses related to leases of low-value assets shall not include the
expenses related to those low-value assets that are included in the expenses
on short-term leases.

MFRS 101.104 An entity classifying expenses by function shall disclose additional information
on the nature of expenses.
16
leases (continued)

MFRS 16.50 The lessee shall classify the total cash outflows in the statement of cash flows
as follows:
(a) Cash payments for the principal portion of the lease liability within
financing activities;
(b) Cash payments for the interest portion of the lease liability consistent with
presentation of interest payments chosen by the Group; and
(c) Short-term lease payments, payments for leases of low value assets and
variable lease payments not included in the measurement of the lease
liability within operating activities.
5.2 Additional entity specific qualitative and quantitative information about its
leasing activities
MFRS 16.BC224  Many leases contain more complex features, which can include variable
payments, termination and extension options and residual value guarantee.
These features of a lease are often determined on the basis of the
individual circumstances of the parties to the contract. Accordingly, to meet
the MFRS 16 disclosure objective, a lessee shall disclose additional
qualitative and quantitative information about its leasing activities that is
relevant to users of financial statements and is not apparent or disclose
elsewhere in the financial statements.
MFRS 16.59, B48  Lessee should apply judgement in determining the most useful and relevant
disclosures, which will depend on a lessee’s individual circumstances. The
information is likely to be relevant to users of financial statements if it helps
those users to understand:
(i) the flexibility provided by leases. Leases may provide flexibility if, for
example, a lessee can reduce its exposure by exercising termination
options or renewing leases with favourable terms and conditions.
(ii) restrictions imposed by leases. Leases may impose restrictions, for
example, by requiring the lessee to maintain particular financial ratios.
(iii) sensitivity of reported information to key variables. Reported
information may be sensitive to, for example, future variable lease
payments.
(iv) exposure to other risks arising from leases.
(v) deviations from industry practice. Such deviations may include, for
example, unusual or unique lease terms and conditions that affect a
lessee’s lease portfolio.
17
leases (continued)
 Accordingly, additional information may include, but not limited to, information
that helps users of financial statements to assess:
(a) Nature of the lessee’s leasing activities [illustrated in Example 1];
(b) Future cash flows to which the lessee is potentially exposed that are not
reflected in the measurement of lease liabilities. This includes exposure
arising from:
MFRS 16.B49 (i) Variable lease payments [Illustrated in Example 2];
MFRS 16.B50 (ii) Extension options and termination options [Illustrated in Example 3];
MFRS 16.B51 (iii) Residual value guarantee; and
(iv) Leases not yet commenced to which the lessee is committed.
(c) Restrictions or covenants imposed by leases [Illustrated in Example
1]; and
MFRS 16.B52 (d) Sale and leaseback transactions.
The illustrative examples (sourced from the IFRS 16 Illustrative Examples

published by the IASB) included in this guide are not exhaustive and should
not be used as a boilerplate for disclosures. The examples illustrate how
judgement could be applied in identifying information that is useful and
relevant to the users of financial statements, which will depend on a lessee’s
individual circumstances.
18
5.2 Additional entity specific qualitative and quantitative

information about its leasing activities (continued)
Example 1: Nature of the lessee’s leasing activities [MFRS 16.59(a)]

and restrictions or covenants imposed by leases [MFRS 16.59(c)]
[GN20]
Nature of leased assets The Group leases various offices, warehouses, retail stores, and
equipment. Rental contracts are typically made for fixed periods of 3 to 8
Range of contractual lease
years but may have extension options.
period and whether there is
any extension option.
Lease terms are negotiated on an individual basis and contain a wide
How leases are negotiated range of different terms and conditions.
Restrictions / covenants The lease agreement do not impose any covenants, but leased assets
imposed by leases may not be used as security for borrowing purposes.
Example 2: Variable payments terms [MFRS 16.IE9] [GN20]
Illustrative 2.1
Key variables upon which
variable lease payment Some of the property leases within the Group contain variable payment
depend [MFRS 16.B49(c)] terms that are linked to sales generated from the store. Variable
payment terms are used, when possible, in newly established stores in
Reasons for using variable order to link rental payments to store cash flows and minimise fixed
lease payments costs.
[MFRS 16.B49(a)]
Fixed and variable rental payments by segment for the financial year
ended 31 December 2019 are summarised below:
Relative magnitude of variable Stores Fixed Variable Total Estimated annual

lease payments to fixed payments payments payments impact on total
rent with a 1%
payments [MFRS 16.B49(b)] increase in sales
No. RM’000 RM’000 RM’000 %
How payments are expected to Segment A 4,522 3,854 120 3,974 0.03%
vary in response to changes in Segment B xxx xxx xxx xxx xxx
key variables [MFRS 16.B49(c)] Segment C xxx xxx xxx xxx xxx
Segment D xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx
19

Example 2: Variable payments terms [MFRS 16.IE9] [GN20]

(continued)
Illustrative 2.2
Key variables upon which
variable lease payment Many of the property leases within the Group contain variable payment
depend [MFRS 16.B49(c)] terms that are linked to the volume of sales made from leased stores.
These terms are used, when possible, in order to match lease
Reason for using variable lease payments with stores generating higher cash flows.
payments [MFRS 16.B49(a)]
For individual stores, up to 100% of lease payments are on the basis of
variable payment terms and there is a wide range of sales percentages
applied. In some cases, variable payment terms also contain minimum
annual payments and caps. Lease payments and terms for the financial
year ended 31 December 2019 are summarised below.
Relative magnitude of variable
lease payments to fixed Stores Fixed Variable Total
payments [MFRS 16.B49(b)] payments payments payments
No. RM’000 RM’000 RM’000
Variable rent with 3,089 1,091 1,435 2,526
minimum
Variable rent with xxx - xxx xxx
no minimum
Fixed rent only xxx xxx - xxx
xxx xxx xxx xxx
How variable payments are

A 1% increase in sales across all stores in the Group would be
expected to vary in response expected to increase total lease payments by approximately xx% - xx%.
to changes in key variables A 5% increase in sales across all stores in the Group would be
[MFRS 16.B49(c)] expected to increase total lease payments by approximately xx% - xx%.
Illustrative 2.3
Many of the property leases within the Group contain variable payment
terms. Local management are responsible for store margins.
Accordingly, lease terms are negotiated by local management and
contain a wide range of payment terms. Variable payment terms are
Reason for using variable
used for a variety of reasons, including minimising the fixed cost base for
lease payments newly established stores or for reasons of margin control and operational
[MFRS 16.B49(a)] flexibility.
Key variables upon which Variable lease payment terms vary widely across the Group:
variable lease payments
(a) the majority of variable payment terms are based on a range of
depend [MFRS 16.B49(c)]
percentages of store sales;
(b) lease payments based on variable terms range from 0% - 20% of
Relative magnitude of variable total lease payments on an individual property; and
lease payments to fixed (c) some variable payment terms include minimum or cap clauses.
payments [MFRS 16.B49(b)]
The overall financial effect of using variable payment terms is that higher
How variable payments are
rental costs are incurred by stores with higher sales. This facilitates the
expected to vary in response management of margins across the Group. Variable rent expenses are
to changes in key variables expected to continue to represent a similar proportion of store sales in
[MFRS 16.B49(c)] future financial years.
20

Example 3: Extension options and termination options [MFRS

16.IE10] [GN20]
Illustrative 3.1
Extension and termination options are included in a number of

equipment leases across the Group. Local teams are responsible for
managing their leases and, accordingly, lease terms are negotiated on
an individual basis and contain a wide range of different terms and
conditions. Extension and termination options are included, when
Reason for using extension possible, to provide local management with greater flexibility to align its
and termination options need for access to equipment with the fulfilment of customer contracts.
[MFRS 16.B50(a)] The individual terms and conditions used vary across the Group. The
majority of extension and termination options held are exercisable only
by the Group and not by the respective lessors.
Prevalence of the exercise of
options that were not included In cases in which the Group is not reasonably certain to exercise an
in the measurement of lease optional extended lease term, payments associated with the optional
liabilities [MFRS 16.B50(c)] period are not included within lease liabilities.
Relative magnitude of optional During 2019, the financial effect of revising lease terms to reflect the
lease payments to lease effect of exercising extension and termination options was an increase in
payments [MFRS 16.B50(b)] recognised lease liabilities of RMxxx.
In addition, the Group has a number of lease arrangements containing

Financial effects of the annual break clauses at no penalty. These leases are classified as short-
extension and termination term leases and are not included within lease liabilities. The short-term
options [MFRS 16.50(d)] lease expense of RMxxx recognised during 2019 included RMxxx
relating to leases with an annual break clause.
Illustrative 3.2
Many of the property leases across the Group contain termination

Reason for using termination options. These options are used to limit the period to which the Group is
options [MFRS 1.B50(a)] committed to individual lease contracts and to maximise operational
flexibility in terms of opening and closing individual restaurants.
21

Example 3: Extension options and termination options [MFRS

16.IE10] [GN20] (continued)
Illustrative 3.2 (continued)
For most leases of restaurants, recognised lease liabilities do not include

potential future rental payments after the exercise date of termination
options because the Group is not reasonably certain to extend the lease
beyond that date. This is the case for most leases for which a longer
lease term can be enforced only by the Group and not by the landlord,
and for which there is no penalty associated with the option.
Potential future rental payments relating to periods following the exercise

Relative magnitude of optional
date of termination options are summarised below.
lease payments to lease
payments [MFRS 16.B50(b)] Business Lease Potential future lease payments not included
segment liabilities in lease liabilities (undiscounted)
recognised Payable during Payable Total
(discounted) 2020 – 2024 during 2025 –
2029
RM’000 RM’000 RM’000 RM’000
A 569 71 94 165
B xxx xxx xxx xxx
C xxx xxx xxx xxx
D xxx xxx xxx xxx
E xxx xxx xxx xxx
xxx xxx xxx xxx
The table below summarises the rate of exercise of termination options

during the financial year 20X0.
Prevalence of the exercise of Business Termination option Termination Termination
options that were not included segment exercisable during option not option exercised
in the measurement of lease 2019 exercised
liabilities [MFRS 16.B50(c)] No. of leases No. of leases No. of leases
A 33 30 3
B xxx xxx xxx
C xxx xxx xxx
D xxx xxx xxx
E xxx xxx xxx
xxx xxx xxx
Illustrative 3.3
Reason for using extension Many of the large equipment leases across the Group contain extension
options [MFRS 16.B50(a)] options. These terms are used to maximise operational flexibility in terms
of managing contracts.
Prevalence of the exercise of These terms are not reflected in measuring lease liabilities in many cases
options that were not included because the options are not reasonably certain to be exercised. This is
in measurement of lease generally the case when the underlying large equipment has not been
liabilities [MFRS 16.B50(c)] allocated for use on a particular customer contract after the exercise date
of an extension option.
22

Illustrative 3.3 (continued)
The table below summarises potential future rental payments relating to

periods following the exercise dates of extension options.
Relative magnitude of optional Business Lease Potential future lease Historical rate
lease payments to lease segment liability payments not included in of exercise of
payments [MFRS 16.B50(b)] recognised lease liabilities extension
(discounted) options
RM’000 RM’000 %
A 569 799 52%
B xxx xxx xxx
C xxx xxx xxx
D xxx xxx xxx
E xxx xxx xxx
xxx xxx xxx
23
5. DISCLOSURES – LESSEE (CONTINUED)
5.3 Maturity analysis of lease liabilities
MFRS 16.58  Lessee is required to disclose a maturity analysis of lease liabilities in

accordance with paragraph 39 and B11 of MFRS 7 “Financial Instruments:
Disclosures”, separately from the maturity analyses of other financial liabilities.
MFRS 16.BC221 Unlike MFRS 117, MFRS 16 does not prescribe the time bands for the maturity
analysis of lease liabilities. Accordingly, lessees applying MFRS 7 to lease
liabilities are required to apply judgement in selecting time bands for the maturity
analysis:
 In a scenario in which disclosing undiscounted cash flows for each of the first
5 years and a total for the periods thereafter provides the most useful
information to users of financial statements, the requirements of MFRS 7
should lead a lessee to disclose this level of detail (see Example 1 below).
 In contrast, in a scenario in which an alternative (and possibly more detailed)

set of time bands provides the most useful information to users of financial
statements, the requirements of MFRS 7 should lead a lessee to disclose that
alternative and more useful set of time bands. For example, for a portfolio of
15 -20 year leases, the requirements of MFRS 7 should lead a lessee to
provide a more detailed maturity analysis than a single amount of the years
beyond the 5th year (see Example 2 below).
Example 1 [GN21]
MFRS 7.39, B11 Undiscounted contractual cash flows: Non-derivative financial liabilities (including
lease liabilities) [GN22]
Total Less 1-2 2-3 3-4 4-5 More
than 1 years years years years than 5
year years
Bank borrowings x,xxx x,xxx x,xxx x,xxx x,xxx x,xxx -
Lease liabilities x,xxx x,xxx x,xxx x,xxx x,xxx x,xxx x,xxx
Trade and other
payables x,xxx x,xxx - - - - -
Example 2 [GN21]
Undiscounted contractual cash flows: Non-derivative financial liabilities [GN22]
Total Less 1-2 2-3 3-4 4-5 More
than 1 years years years years than 5
month years
Bonds x,xxx x,xxx x,xxx x,xxx x,xxx x,xxx -
Lease liabilities* x,xxx - - x,xxx x,xxx x,xxx x,xxx
Trade and other
payables x,xxx x,xxx x,xxx - - - -
* Further information about the maturity of lease liabilities is provided in the table
below:
Total 5 – 10 10 – 15 15 – 20
years years years
Lease liabilities x,xxx x,xxx x,xxx x,xxx

The maturity analysis of lease liabilities could be presented together in the
MFRS 7 maturity analysis table but as a separate item from other financial
liabilities as shown in the Examples above. Alternatively, lessee could present
the maturity analysis of lease liabilities in a separate table.
24
6. DISCLOSURES – LESSOR
MFRS 16.89
 MFRS 16 enhances the previous disclosure requirements of a lessor in
MFRS 117 to meet the disclosure objective of MFRS 16. Specifically, a
lessor is required to disclose sufficient information on its leasing activities
so as to give a basis for users of financial statements to assess the effects
of these activities on the financial position, financial performance and cash
flows of the lessor.
6.1 Analysis of lease income
MFRS 16.90,  MFRS 16 requires a lessor to disclose information about the different
BC252 component of lease income recognised during the reporting period. This
requirement is similar to the requirement in MFRS 15 of which entities are
required to disaggregate revenue recognised from contract with customers
during the reporting period.
Example [GN23]
Lease income from lease contracts in which the Group acts as a lessor:
2019
RM’000
MFRS 16.90(a)
Finance lease
Finance income on the net investment in the lease xxx
Income relating to variable lease payments not included in
the measurement of the net investment in the lease xxx
MFRS 16.90(b) Operating lease

Lease income (excluding contingent rents) xxx
Lease income - contingent rents xxx
MFRS 16.91 A lessor shall provide the disclosures specified in MFRS 16.90 illustrated in
Example above in a tabular format, unless other format is more appropriate.
25
6. DISCLOSURES - LESSOR (CONTINUED)
6.2 Additional entity specific qualitative and quantitative information
MFRS 16.92  A lessor shall disclose additional qualitative and quantitative information
about its leasing activities necessary to meet the disclosure objective in
MFRS 16. This additional information includes, but is not limited to,
information that helps users of financial statements to assess:
(a) the nature of the lessor’s leasing activities; and
(b) how the lessor manages the risk associated with any rights it retains
in underlying assets. In particular, a lessor shall disclose its risk
management strategy for the rights it retains in underlying assets,
including any means by which the lessor reduces that risk. Such
means may include, for example, buy-back agreements, residual
value guarantees or variable lease payments for use in excess of
specified limits. [GN24]
Uncertainty about the residual value of the underlying asset at the end of the
MFRS 16.BC254
lease is often a lessor’s primary risk. Accordingly, MFRS 16 requires a lessor to
disclose information about how it manages its risk associated with any rights it
retains in the underlying asset.
The IASB also noted that disclosing information about residual asset risk will
also provide users of financial statements with useful information about the
distribution of risk for a lessor between credit risk relating to lease payments
receivable and residual asset risk relating to the interest in the underlying asset.
Example
The investment properties are leased to tenants under operating leases with
rentals payable on a monthly basis. Lease payments for some contracts are
linked to sales generated from the stores, but there are no other variable lease
payments that depend on an index or rate. Where considered necessary to
reduce credit risk, the Group may obtain bank guarantees for the term of the
lease.
Although the Group is exposed to changes in the residual value at the end of
the current leases, the Group typically enters into new operating leases
following the expiry of existing operating leases. Expectations about the future
residual values are reflected in the fair value of the properties.
26
6. DISCLOSURES - LESSOR (CONTINUED)
6.3 Changes in the carrying amount of net investment in finance leases
MFRS 16.93  MFRS 16 requires a lessor to provide a qualitative and quantitative

MFRS 16.BC259 explanation of the significant changes in the carrying amount of the net
investment in finance leases during the reporting period to allow users of
financial statements to understand these significant changes. This
disclosure was not required by MFRS 117.
Example
During the financial year, the increase of finance lease receivables are due to
the following reasons:
2019
RM’00
0
Balance as at 1 January 2019 xxx
New leases entered into during the financial year xxx
Lease payments received during the financial year (xxx)
Adjustment due to lease modification xxx
Others xxx
Balance as at 31 December 2019 xxx
6.4 Information about assets subject to operating lease [GN25]
MFRS 16.95  MFRS 16 requires lessor to apply disclosures in MFRS 116 for PPE subject
to operating lease. In applying MFRS 116, a lessor is required to
disaggregate each class of PPE into assets subject to operating leases and
assets not subject to operating leases. Accordingly, a lessor shall provide
the disclosures required by MFRS 116 for each class of asset subject to an
operating lease.

MFRS 16.BC256 The IASB observed that leased and owned assets are typically used for
different purposes, i.e. lease assets generate rental income rather than
contributing towards any other revenue-generating activity of the lessor. The
users of financial statements would benefit from obtaining information about
leased assets under operating leases (i.e. assets not held and used by the
lessor) as compared to owned assets that are held and used by the lessor.
MFRS 16.96  A lessor shall also apply the disclosure requirements in MFRS 136, MFRS
138 “Intangible Assets”, MFRS 140 and MFRS 141 “Agriculture” for assets
subject to operating leases.
27
6. DISCLOSURES – LESSOR (CONTINUED)
6.5 Maturity analysis of undiscounted lease payments
MFRS 16.BC257,  MFRS 16 requires a lessor to disclose, for both finance and operating leases,
BC258 a maturity analysis of the undiscounted lease payments to be received on an
annual basis for a minimum of each of the first 5 years following the reporting
date and a total of the amounts for the remaining years.
This is a change from the previous requirements in MFRS 117, which required
a maturity analysis showing in 3 bands: ‘not later than 1 year’, ‘later than 1
year and not later than 5 years’ and ‘later than 5 years’.
The IASB is of the view that a more detailed maturity analysis will enable
users of financial statements to more accurately forecast future lease cash
flows and estimate liquidity risk.
Example – Finance leases
MFRS 16.94 The Group subleases an office building that it leased in 2014. The Group has
classified the sublease as a finance lease because the sublease is for the whole
of the remaining term of the head lease. The following table sets out a maturity
analysis of lease receivables, showing the undiscounted lease payments to be
received after the reporting date.
2019
RM’000
Within 1 year xxx
In the 2nd year xxx
In the 3rd year xxx
In the 4th year xxx
Total undiscounted lease payments receivable xxx
Unearned finance income (xxx)
Discounted unguaranteed residual value xxx
Net investment in the lease xxx
Example – Operating leases
MFRS 16.97 The Group leases out its investment property and some machinery. The
Group classified these leases as operating lease, because they do not
transfer substantially all of the risks and rewards incidental to the ownership
of the assets. The following table sets out the maturity analysis of lease
payments, showing the undiscounted lease payments to be received after the
reporting date.
2019
RM’000
Within 1 year xxx
In the 2nd year xxx
In the 3rd year xxx
In the 4th year xxx
In the 5th year xxx
Later than 5 years xxx
Total undiscounted lease payments xxx
28
Appendix: MFRS 16 disclosure checklist
29
Appendix: MFRS 16 ‘Leases’ - Disclosure Checklist
Yes/Not Reference
applicable/
Not material
1 Transition disclosures
MFRS 16.C3 As a practical expedient, an entity is not required to
reassess whether a contract is, or contains, a lease at
the date of initial application. Instead, the entity is
permitted:
(a) to apply this Standard to contracts that were
previously identified as leases applying MFRS 117
Leases and IC Interpretation 4 Determining
whether an Arrangement contains a Lease. The
entity shall apply the transition requirements in
paragraphs C5–C18 to those leases.
(b) not to apply this Standard to contracts that were not
previously identified as containing a lease applying
MFRS 117 and IC Interpretation 4.
MFRS 16.C4 1 If an entity chooses the practical expedient in paragraph
C3, it shall disclose that fact.
Leases previously classified as operating leases
MFRS 2 When applying this Standard retrospectively in
16.C10(c)(ii)
accordance with paragraph C5(b) of MFRS 16 to leases
previously classified as operating leases applying MFRS
117 Leases, a lessee may elect not to apply the
requirements in paragraph C8 of MFRS 16 to leases for
which the lease term ends within 12 months from the
date of initial application. In this case, the lessee shall
include the cost associated with those leases within the
disclosure of short-term lease expense in the annual
reporting period that includes the date of initial
application.
Leases previously classified as finance leases
MFRS 16.C12 3 If a lessee elects to apply this Standard in accordance
with paragraph C5(b) of MFRS 16, the lessee shall
disclose information about initial application required by
paragraph 28 of MFRS 108 Accounting Policies,
Changes in Accounting Estimates and Errors, except for
the information specified in paragraph 28(f) of MFRS
108 Accounting Policies, Changes in Accounting
Estimates and Errors. Instead of the information
specified in paragraph 28(f) of MFRS 108 Accounting
Policies, Changes in Accounting Estimates and Errors,
the lessee shall disclose:
(a) the weighted average lessee’s incremental
borrowing rate applied to lease liabilities recognised
in the statement of financial position at the date of
initial application; and
(b) an explanation of any difference between:
(i) operating lease commitments disclosed
applying MFRS 117 Leases at the end of the
annual reporting period immediately
preceding the date of initial application,
discounted using the incremental borrowing
rate at the date of initial application as
described in paragraph C8(a) of MFRS 16;
and
30
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applicable/
Not material
(ii) lease liabilities recognised in the statement of
financial position at the date of initial
application.
MFRS 16.C13 4 If a lessee uses one or more of the specified practical
expedients in paragraph C10, it shall disclose that fact.
2 Consequential amendments to MFRS 140 ‘Investment
Property’
MFRS 140.74 The disclosures in paragraphs 75 to 79 of MFRS 140
apply in addition to those in MFRS 16. In accordance
with MFRS 16, the owner of an investment property
provides lessors’ disclosures about leases into which it
has entered. A lessee that holds an investment property
as a right-of-use asset provides lessees’ disclosures as
required by MFRS 16 and lessors’ disclosures as
required by MFRS 16 for any operating leases into
which it has entered.
Fair value model and cost model
MFRS 140.75 1 An entity shall disclose:
(a) whether it applies the fair value model or the cost
model.
(c) when classification is difficult (see paragraph 14),
the criteria it uses to distinguish investment
property from owner-occupied property and from
property held for sale in the ordinary course of
business.
(e) the extent to which the fair value of investment
property (as measured or disclosed in the financial
statements) is based on a valuation by an
independent valuer who holds a recognised and
relevant professional qualification and has recent
experience in the location and category of the
investment property being valued. If there has been
no such valuation, that fact shall be disclosed.
(f) the amounts recognised in profit or loss for:
(i) rental income from investment property;
(ii) direct operating expenses (including repairs
and maintenance) arising from investment
property that generated rental income during
the period;
(iii) direct operating expenses (including repairs
and maintenance) arising from investment
property that did not generate rental income
during the period; and
(iv) the cumulative change in fair value
recognised in profit or loss on a sale of
investment property from a pool of assets in
which the cost model is used into a pool in
which the fair value model is used (see
paragraph 32C).
(g) the existence and amounts of restrictions on the
realisability of investment property or the
remittance of income and proceeds of disposal.
31
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Not material
(h) contractual obligations to purchase, construct or
develop investment property or for repairs,
maintenance or enhancements.
Fair value model
MFRS 140.76 2 In addition to the disclosures required by paragraph 75,
an entity that applies the fair value model in paragraphs
33–55 shall disclose a reconciliation between the
carrying amounts of investment property at the
beginning and end of the period, showing the following:
(a) additions, disclosing separately those additions
resulting from acquisitions and those resulting from
subsequent expenditure recognised in the carrying
amount of an asset;
(b) additions resulting from acquisitions through
business combinations;
(c) assets classified as held for sale or included in a
disposal group classified as held for sale in
accordance with MFRS 5 and other disposals;
(d) net gains or losses from fair value adjustments;
(e) the net exchange differences arising on the
translation of the financial statements into a
different presentation currency, and on translation
of a foreign operation into the presentation
currency of the reporting entity;
(f) transfers to and from inventories and owner-
occupied property; and
(g) other changes.
MFRS 140.77 3 When a valuation obtained for investment property is
adjusted significantly for the purpose of the financial
statements, for example to avoid double-counting of
assets or liabilities that are recognised as separate
assets and liabilities as described in paragraph 50, the
entity shall disclose a reconciliation between the
valuation obtained and the adjusted valuation included
in the financial statements, showing separately the
aggregate amount of any recognised lease liabilities that
have been added back, and any other significant
adjustments.
MFRS 140.78 4 In the exceptional cases referred to in paragraph 53,
when an entity measures investment property using the
cost model in MFRS 116 or in accordance with MFRS
16, the reconciliation required by paragraph 76 shall
disclose amounts relating to that investment property
separately from amounts relating to other investment
property. In addition, an entity shall disclose:
(a) a description of the investment property;
(b) an explanation of why fair value cannot be
measured reliably;
(c) if possible, the range of estimates within which fair
value is highly likely to lie; and
32
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applicable/
Not material
(d) on disposal of investment property not carried at
fair value:
(i) the fact that the entity has disposed of
investment property not carried at fair value;
(ii) the carrying amount of that investment
property at the time of sale; and
(iii) the amount of gain or loss recognised.
Cost model
MFRS 140.79 5 In addition to the disclosures required by paragraph 75,
an entity that applies the cost model in paragraph 56
shall disclose:
(a) the depreciation methods used;
(b) the useful lives or the depreciation rates used;
(c) the gross carrying amount and the accumulated
depreciation (aggregated with accumulated
impairment losses) at the beginning and end of the
period;
(d) a reconciliation of the carrying amount of
investment property at the beginning and end of the
period, showing the following:
(i) additions, disclosing separately those
additions resulting from acquisitions and
those resulting from subsequent expenditure
recognised as an asset;
(ii) additions resulting from acquisitions through
business combinations;
(iii) assets classified as held for sale or included
in a disposal group classified as held for sale
in accordance with MFRS 5 and other
disposals;
(iv) depreciation;
(v) the amount of impairment losses recognised,
and the amount of impairment losses
reversed, during the period in accordance
with MFRS 136;
(vi) the net exchange differences arising on the
translation of the financial statements into a
different presentation currency, and on
translation of a foreign operation into the
presentation currency of the reporting entity;
(vii) transfers to and from inventories and owner-
occupied property; and
(viii) other changes; and
(e) the fair value of investment property. In the
exceptional cases described in paragraph 53, when
an entity cannot measure the fair value of the
investment property reliably, it shall disclose:
(i) a description of the investment property;
33
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applicable/
Not material
(ii) an explanation of why fair value cannot be
measured reliably; and
(iii) if possible, the range of estimates within
which fair value is highly likely to lie.
3 Accounting by a lessee
Presentation
MFRS 16.47 1 A lessee shall either present in the statement of financial
position, or disclose in the notes:
(a) right-of-use assets separately from other assets. If
a lessee does not present right-of-use assets
separately in the statement of financial position, the
lessee shall:
(i) include right-of-use assets within the same
line item as that within which the
corresponding underlying assets would be
presented if they were owned; and
(ii) disclose which line items in the statement of
financial position include those right-of-use
assets.
(b) lease liabilities separately from other liabilities. If
the lessee does not present lease liabilities
separately in the statement of financial position, the
lessee shall disclose which line items in the
statement of financial position include those
liabilities.
MFRTS 16.48 The requirement in paragraph 47(a) does not apply to
right-of-use assets that meet the definition of investment
property, which shall be presented in the statement of
financial position as investment property.
MFRS 16.49 2 In the statement of profit or loss and other
comprehensive income, a lessee shall present interest
expense on the lease liability separately from the
depreciation charge for the right-of-use asset. Interest
expense on the lease liability is a component of finance
costs, which paragraph 82(b) of MFRS 101 Presentation
of Financial Statements requires to be presented
separately in the statement of profit or loss and other
comprehensive income.
MFRS 16.50 3 In the statement of cash flows, a lessee shall classify:
(a) cash payments for the principal portion of the lease
liability within financing activities;
(b) cash payments for the interest portion of the lease
liability applying the requirements in MFRS 107
Statement of Cash Flows for interest paid; and
(d) short-term lease payments, payments for
leases of low-value assets and variable
lease payments not included in the
measurement of the lease liability within
operating activities.
34
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applicable/
Not material
Disclosures
MFRS 16.51 4 The objective of the disclosures is for lessees to
disclose information in the notes that, together with the
information provided in the statement of financial
position, statement of profit or loss and statement of
cash flows, gives a basis for users of financial
statements to assess the effect that leases have on the
financial position, financial performance and cash flows
of the lessee. Paragraphs 52-60 specify requirements
on how to meet this objective.
MFRS 16.52 A lessee shall disclose information about its leases for
which it is a lessee in a single note or separate section
in its financial statements. However, a lessee need not
duplicate information that is already presented
elsewhere in the financial statements, provided that the
information is incorporated by cross-reference in the
single note or separate section about leases.
MFRS 16.53 5 A lessee shall disclose the following amounts for the
reporting period:
(a) depreciation charge for right-of-use assets by class
of underlying asset;
(b) interest expense on lease liabilities;
(c) the expense relating to short-term leases
accounted for applying paragraph 6. This expense
need not include the expense relating to leases
with a lease term of one month or less;
(d) the expense relating to leases of low-value assets
accounted for applying paragraph 6. This expense
shall not include the expense relating to short-term
leases of low-value assets included in paragraph
53(c);
(e) the expense relating to variable lease payments not
included in the measurement of lease liabilities;
(f) income from subleasing right-of-use assets;
(g) total cash outflow for leases;
(h) additions to right-of-use assets;
(i) gains or losses arising from sale and leaseback
transactions; and
(j) the carrying amount of right-of-use assets at the
end of the reporting period by class of underlying
asset.
MFRS 16.54 A lessee shall provide the disclosures specified in
paragraph 53 in a tabular format, unless another format
is more appropriate. The amounts disclosed shall
include costs that a lessee has included in the carrying
amount of another asset during the reporting period.
35
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applicable/
Not material
MFRS 16.55 6 A lessee shall disclose the amount of its lease
commitments for short-term leases accounted for
applying paragraph 6 if the portfolio of short-term leases
to which it is committed at the end of the reporting
period is dissimilar to the portfolio of short-term leases to
which the short-term lease expense disclosed applying
paragraph 53(c) relates.
MFRS 16.56 7 If right-of-use assets meet the definition of investment
property, a lessee shall apply the disclosure
requirements in MFRS 140 Investment Property. In that
case, a lessee is not required to provide the disclosures
in paragraph 53(a), (f), (h) or (j) for those right-of-use
assets.
MFRS 16.57 8 Where the lessee measures right-of-use assets at
revalued amounts applying MFRS 116, disclose:
MFRS 116.77 (a) the effective date of the revaluation;
(b) whether an independent valuer was involved;
(e) for each revalued class of property, plant and
equipment, the carrying amount that would have
been recognised had the assets been carried under
the cost model; and
(f) the revaluation surplus, indicating the change for
the period and any restrictions on the distribution of
the balance to shareholders.
MFRS 16.58 9 A lessee shall disclose a maturity analysis of lease
liabilities applying paragraphs 39 and B11 of MFRS 7
Financial Instruments: Disclosures separately from the
maturity analyses of other financial liabilities.
MFRS 16.59 10 In addition to the disclosures required in paragraphs 53–
58, a lessee shall disclose additional qualitative and
quantitative information about its leasing activities
necessary to meet the disclosure objective in paragraph
51 (as described in paragraph B48). This additional
information may include, but is not limited to, information
MFRS 16.59(a) that helps users of financial statements to assess:
(a) the nature of the lessee’s leasing activities;
MFRS 16.59(b)(i) (b) future cash outflows to which the lessee is
potentially exposed that are not reflected in the
measurement of lease liabilities. This includes
exposure arising from:
(i) variable lease payments (as described in
paragraph B49);
MFRS 16.B49 Additional information relating to variable
lease payments that, depending on the
circumstances, may be needed to satisfy the
disclosure objective in paragraph 51 could
include information that helps users of
financial statements to assess, for example:
- the lessee’s reasons for using variable
lease payments and the prevalence of
those payments;
36
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applicable/
Not material
- the relative magnitude of variable lease
payments to fixed payments;
- key variables upon which variable lease
payments depend and how payments are
expected to vary in response to changes
in those key variables; and
- other operational and financial effects of
variable lease payments.
MFRS 16.59(b)(ii) (ii) extension options and termination options (as
described in paragraph B50);
MFRS 16.B50 Additional information relating to extension
options or termination options that,
depending on the circumstances, may be
needed to satisfy the disclosure objective in
paragraph 51 could include information that
helps users of financial statements to assess,
for example:
- the lessee’s reasons for using extension
options or termination options and the
prevalence of those options;
- the relative magnitude of optional lease
payments to lease payments;
- the prevalence of the exercise of options
that were not included in the
measurement of lease liabilities; and
those options.
MFRS (iii) residual value guarantees (as described in
16.59(b)(iii)
paragraph B51); and
MFRS 16.B51 Additional information relating to residual
value guarantees that, depending on the
circumstances, may be needed to satisfy the
disclosure objective in paragraph 51 could
include information that helps users of
financial statements to assess, for example:
- the lessee’s reasons for providing
residual value guarantees and the
prevalence of those guarantees;
- the magnitude of a lessee’s exposure to
residual value risk;
- the nature of underlying assets for which
those guarantees are provided; and
those guarantees.
MFRS (iv) leases not yet commenced to which the
16.59(b)(iv)
lessee is committed.
MFRS 16.59(c) (c) restrictions or covenants imposed by leases; and
MFRS 16.59(d) (d) sale and leaseback transactions (as described in
paragraph B52).
37
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applicable/
Not material
Sale and leaseback transaction
MFRS 16.B52 11 Additional information relating to sale and leaseback
transactions that, depending on the circumstances, may
be needed to satisfy the disclosure objective in
paragraph 51 could include information that helps users
of financial statements to assess, for example:
(a) the lessee’s reasons for sale and leaseback
transactions and the prevalence of those
transactions;
(b) key terms and conditions of individual sale and
leaseback transactions;
(c) payments not included in the measurement of lease
liabilities; and
(d) the cash flow effect of sale and leaseback
transactions in the reporting period.
MFRS 16.B48 12 In determining whether additional information about
leasing activities is necessary to meet the disclosure
objective in paragraph 51, a lessee shall consider:
(a) whether that information is relevant to users of
financial statements. A lessee shall provide
additional information specified in paragraph 59
only if that information is expected to be relevant to
users of financial statements. In this context, this is
likely to be the case if it helps those users to
understand:
(i) the flexibility provided by leases. Leases may
provide flexibility if, for example, a lessee can
reduce its exposure by exercising termination
options or renewing leases with favourable
terms and conditions.
(ii) restrictions imposed by leases. Leases may
impose restrictions, for example, by requiring
the lessee to maintain particular financial
ratios.
(iii) sensitivity of reported information to key
variables. Reported information may be
sensitive to, for example, future variable
lease payments.
(iv) exposure to other risks arising from leases.
(v) deviations from industry practice. Such
deviations may include, for example, unusual
or unique lease terms and conditions that
affect a lessee’s lease portfolio.
(b) whether that information is apparent from
information either presented in the primary financial
statements or disclosed in the notes. A lessee need
not duplicate information that is already presented
elsewhere in the financial statements.
MFRS 16.60 13 A lessee that accounts for short-term leases or leases of
low-value assets applying paragraph 6 shall disclose
that fact.
38
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applicable/
Not material
4 Accounting by a lessor
Presentation
MFRS 16.88 1 A lessor shall present underlying assets subject to
operating leases in its statement of financial position
according to the nature of the underlying asset.
Disclosures
MFRS 16.89 2 The objective of the disclosures is for lessors to disclose
information in the notes that, together with the
information provided in the statement of financial
position, statement of profit or loss and statement of
cash flows, gives a basis for users of financial
statements to assess the effect that leases have on the
financial position, financial performance and cash flows
of the lessor. Paragraphs 90–97 specify requirements
on how to meet this objective.
MFRS 16.90 3 A lessor shall disclose the following amounts for the
reporting period:
(a) for finance leases:
(i) selling profit or loss;
(ii) finance income on the net investment in the
lease; and
(iii) income relating to variable lease payments
not included in the measurement of the net
investment in the lease.
(b) for operating leases, lease income, separately
disclosing income relating to variable lease
payments that do not depend on an index or a rate.
MFRS 19.91 A lessor shall provide the disclosures specified in
paragraph 90 in a tabular format, unless another format
is more appropriate.
MFRS 16.92 4 A lessor shall disclose additional qualitative and
quantitative information about its leasing activities
necessary to meet the disclosure objective in paragraph
89. This additional information includes, but is not limited
to, information that helps users of financial statements to
assess:
(a) the nature of the lessor’s leasing activities; and
(b) how the lessor manages the risk associated with
any rights it retains in underlying assets. In
particular, a lessor shall disclose its risk
management strategy for the rights it retains in
underlying assets, including any means by which
the lessor reduces that risk. Such means may
include, for example, buy-back agreements,
residual value guarantees or variable lease
payments for use in excess of specified limits.
Finance leases
MFRS 16.93 5 A lessor shall provide a qualitative and quantitative
explanation of the significant changes in the carrying
amount of the net investment in finance leases.
39
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applicable/
Not material
MFRS 16.94 6 A lessor shall disclose a maturity analysis of the lease
payments receivable, showing the undiscounted lease
payments to be received on an annual basis for a
minimum of each of the first five years and a total of the
amounts for the remaining years. A lessor shall
reconcile the undiscounted lease payments to the net
investment in the lease. The reconciliation shall identify
the unearned finance income relating to the lease
payments receivable and any discounted unguaranteed
residual value.
Operating leases
MFRS 16.95 7 For items of property, plant and equipment subject to an
operating lease, a lessor shall apply the disclosure
requirements of MFRS 116 Property, Plant and
Equipment. In applying the disclosure requirements in
MFRS 116, a lessor shall disaggregate each class of
property, plant and equipment into assets subject to
operating leases and assets not subject to operating
leases. Accordingly, a lessor shall provide the
disclosures required by MFRS 116 Property, Plant and
Equipment for assets subject to an operating lease (by
class of underlying asset) separately from owned assets
held and used by the lessor.
MFRS 16.96 8 A lessor shall apply the disclosure requirements in
MFRS 136 Impairment of Assets, MFRS 138 Intangible
Assets, MFRS 140 Investment Property and MFRS 141
Agriculture for assets subject to operating leases.
MFRS 16.97 9 A lessor shall disclose a maturity analysis of lease
payments, showing the undiscounted lease payments to
be received on an annual basis for a minimum of each
of the first five years and a total of the amounts for the
remaining years.
40
Do you have any further questions on MFRS 16?
Contact any of the following team members from PwC Malaysia’s Capital Markets &
Accounting Advisory Services (CMAAS):
Siew Kar Wai Gan Wee Fong

Assurance Partner Assurance Partner
Email: [email protected] Email: [email protected]
Tel: +60 (3) 2173 0740 Tel: +60 (3) 2173 0700
Foo Wee Liam Michelle Loh

Assurance Executive Director Assurance Executive Director
Email: [email protected] Email: [email protected]
Tel: +60 (3) 2173 0620 Tel: +60 (3) 2173 0858
_____________________________________________________________________
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42 in Malaysia, each of which is a separate legal entity.

MFRS 16 Disclosure Guide 110919

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Guide to Drafting

For MFRS preparers applying the simplified

Disclosure objective of MFRS 16

Transition disclosures upon adoption of MFRS 16

Tips to using this disclosure guide

(iv) Examples of disclosures are shaded in grey.

Notes to the financial statements

1 Basis of preparation (extract) ............................................................................................................. 1

2 Changes in accounting policies upon adoption of MFRS 16 ............................................................. 1

3 Significant accounting policies

3.1 Leases in which the Group is a lessee

3.2 Leases in which the Group is a lessor

4 Critical accounting estimates and significant judgements ............................................................... 13

5 Disclosures – Lessee ...................................................................................................................... 14

6 Disclosures – Lessor ....................................................................................................................... 25

7 Appendix – MFRS 16 disclosure checklist ...................................................................................... 29

MFRS 16.C5(b) Example

MFRS 108.28(c) 2. CHANGES IN ACCOUNTING POLICIES UPON ADOPTION OF MFRS 16

Under the simplified retrospective transition method, the 2018 comparative

MFRS 16.C3, C4 Key consideration [GN1]

(b) Leases classified as finance leases under MFRS 117

Key consideration [GN3]

The Group as a lessor

Key consideration [GN4]

MFRS 16 is not explicit on where to present the net impacts of recognising a

In addition, the lessee shall disclose:

(a) Adjustments as at 1 January 2019 [GN5]

The net impact on retained earnings on 1 January 2019 was a decrease of

Key consideration [GN5]

The voluntary disclosure stating the significant impacts at the DIA in a

(b) Measurement of lease liabilities on 1 January 2019

3.1 Leases in which the Group is a lessee

The Group as a lessee

Accounting policies applied from 1 January 2019

Key consideration [GN6]

(a) Lease term

3.1 Leases in which the Group is a lessee (continued)

The Group as a lessee (continued)

Accounting policies applied from 1 January 2019 (continued)

MFRS 16.23 - (b) ROU assets

Key consideration [GN7]

3.2 Leases in which the Group is a lessee (continued)

The Group as a lessee (continued)

Accounting policies applied from 1 January 2019 (continued)

(b) ROU assets (continued)

MFRS 16.47(a) Key consideration [GN8]

(c) Lease liabilities

3.1 Leases in which the Group is a lessee (continued)

The Group as a lessee (continued)

Accounting policies applied from 1 January 2019 (continued)

(c) Lease liabilities

Key consideration [GN9]

(d) Reassessment of lease liabilities

Key consideration [GN10]

3.1 Leases in which the Group is a lessee (continued)

The Group as a lessee (continued)

Accounting policies applied from 1 January 2019 (continued)

(e) Short-term leases and leases of low-value assets

Key consideration [GN11]

MFRS 117 Accounting policies applied until 31 December 2018 [GN12]