Category: Sample Disclosure in Financial Statements

Sample Disclosure: Note On Discontinued Operations (27 January 2011)

NOTE 5. DISCONTINUED OPERATIONS

On 1 July 2010, the Company entered into a conditional share purchase agreement with XYZ International Sdn. Bhd. for the disposal of its 100% equity interest in DEF Bottles and Containers Sdn. Bhd. (“DEF”) comprising 100,000 ordinary shares of RM1.00 each, representing the whole of the issued and fully paid-up share capital of DEF for a total cash consideration of RM700,000 and the settlement of the Intra-Group Loans owing by the DEF to the other companies within the Group.

The disposal was completed on 15 September 2010.

The analysis of the total gain on disposal, carrying values of the assets and liabilities disposed, and also the net cash inflow from the disposal were as follows:


The results of the disposal group, which represents the entire bottles and containers manufacturing and packaging business under DEF, and the cash flows from discontinued operations are disclosed under discontinued operations in the financial year ended 30 November 2010 and the comparative results have been restated accordingly.



Please click this for all the relevant disclosure in one place: Sample Disclosure Of Continuing And Discontinued Operations In One Place (27 January 2011)

Sample Disclosure – Accounting Policy Of Warrants Reserve (24 January 2011)

Warrants reserve

Proceeds from the issuance of warrants, net of issue costs, are credited to warrants reserve. Warrants reserve is non-distributable and will be transferred to share premium account upon the exercise of warrants. Balance of warrants reserve in relation to the unexercised warrants at the expiry of the warrants period will be transferred to accumulated profits.

Sample Disclosure – Accounting Policy Of Investment Properties (19 January 2011)

Investment Properties

Investment properties are held for long term rental yields or for capital appreciation or both, and are not occupied by companies within the Group.

Investment properties are measured initially at cost. After initial recognition, investment properties are measured and carried at fair value.

Fair value is based on valuation performed by appointed independent registered valuer(s) taking into account factors such as the property growth and market in the surrounding area. The fair value of the investment properties reflects the market conditions at the balance sheet date. Changes in fair values are recorded in the income statement as investment properties fair value adjustment.

On disposal of an investment property, or when it is permanently withdrawn from use and future economic benefits no longer are expected from the property concerned, it shall be derecognised. The difference between the net disposal proceeds and the carrying value is recognised in the income statement in the period of the retirement or disposal.

Transfer to or from investment property will be made when there is a change in use of the property. The commencement of owner-occupation for the property would result in a transfer of the investment property to self-occupied property, included in category of asset named “Property, Plant and Equipment”. On the other hand, the end of owner-occupation of a property would result in  a transfer from the self-occupied property which is included in Property, Plant and Equipment to the category of asset known as “Investment Properties”.

If a self-occupied property became an investment property that will be carried at fair value, the revaluation surplus of the self-occupied property, included in Asset Revaluation Reserve account would be transferred to accumulated profits.

For a transfer from investment property which is carried at fair value to self-occupied property, the fair value of the property at the date of change in use would be treated as deemed cost of the property for subsequent accounting purposes.

For the transfer of investment property to prepaid lease payments, the Group have adopted the transitional provision stated in Para 67A of FRS 117 which allows the Group to retain the unamortised revalued amount of the property as the surrogate carrying amount of prepaid lease payments.

Sample Disclosure – Accounting Policy Of Financial Guarantees Issued (7 January 2011)

Financial guarantees issued

Financial guarantees issued by the Company and those companies within the consolidated entity (“Group”) are recognised as financial liabilities at the date the guarantee is issued. Liabilities arising from financial guarantee contracts, including Company guarantees of subsidiaries through deeds of cross guarantee, are initially recognised at fair value and subsequently at the higher of the amount determined in accordance with the Group’s provisions accounting policy (please refer to Note XX) and the amount initially recognised less cumulative amortisation.

The fair value of the financial guarantee is determined by way of calculating the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligation.

Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment in the financial statements of the Company.

Sample Disclosure – Note On Unrecognised Deferred Tax Liability (21 December 2010)

Unrecognised Deferred Tax Liability

The Company has not recognised deferred tax liability amounted to approximately RM10,345,000 as at the end of the financial year relating to temporary differences arising from the difference between the carrying values of property, plant and equipment and their respective tax bases. This is due to the directors are of the opinion that the deferred tax liability is not probable to crystalize in the foreseeable future as a result of the tax holiday period enjoyed by the Company as a pioneer status company, granted by the Government of Malaysia.

Sample Disclosure – Note On Significant Post Balance Sheet Event (20 December 2010)

SIGNIFICANT POST BALANCE SHEET EVENT

On 12 November 2010, the Company entered into a Memorandum of Understanding (“MOU”) with DEF Sdn. Bhd. (a trade debtor of the Company) to extinguish/fully settle trade debts owed to the Company by DEF Sdn. Bhd. and GHI Sdn. Bhd. (a related party of DEF Sdn. Bhd.) totalling RM32,000,000 as at the end of the financial year, via a proposed contra/set-off of properties, comprising the relevant unsold units of commercial shop lots, owned by DEF Sdn. Bhd.. DEF Sdn. Bhd. is in the process of conducting a separate settlement agreements with GHI Sdn. Bhd. relating to this exercise.

The Company has appointed a registered valuer to conduct a valuation exercise on the said properties and the outcome of the valuation was that the preliminary combined indicative values of the relevant unsold units owned by DEF Sdn. Bhd. was higher than the combined debts owed to the Company by DEF Sdn. Bhd., GHI Sdn. Bhd. and XYZ Sdn. Bhd..

This corporate exercise will require the Company’s members’ extraordinary general meeting (“EGM”) to be convened and the EGM is expected to be held in January 2011. The corporate exercise is expected to be completed within 3 months from the date of this report.