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Practical Application of MFRS 9, 15 & 16 and Their Interactions

Expert Speaker Danny Tan Boon Wooi

MYR1,802.00 (No SST)

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Overview

Designed specifically for accountants and finance leaders, this two-day programme provides an insight into the salient technical features of the three new Standards – MFRS 9 Financial Instruments, MFRS 15 Revenue from Contracts with Customers and MFRS 16 Leases.

The programme uses practical case studies to illustrate how the three Standards are interrelated to each other. Depending on the contractual terms, all the three new Standards could be applied in a single contract. You will gain a working knowledge on how to apply these three Standards in practice and understand the impact on financial position (effect gearing ratios), financial performance (timing and amount of income and expense) and cash flows.

What You Will Learn

  • Get an overview of the three new Standards
  • Learn how these new Standards interact with each other
  • Be aware of and be best prepared for the implications of the new Standards on financial performance, financial position and cash flow of your business

Who Should Attend

This workshop is suitable for:

  • Those who are responsible for preparing, reporting and auditing financial statements of a business

Programme Outline

Day 1

MFRS/IFRS9 Financial Instruments

Chapter 1 Objectives
  • Comparing objectives in between the old and new Standard
Chapter 2 Scope
  • An analysis of the complex scope exclusion:
    • How to handle subsidiaries, associates and jointly controlled entities
    • Leases: lesser and lessee scope
    • Issuer of equity instruments
    • Insurance contracts Vs Financial guarantee contracts
    • Contract in business combination
    • Loan commitments
    • Provisions
    • Share-based-payments
    • Contract to buy or sell non-financial items
    • Commodity derivative contracts to be settled net in cash Vs. physical delivery
Chapter 3 Recognition and Derecognition
  • Recognition of financial assets and financial liabilities
    • Financial guarantee contracts
    • Regular way purchase and sale of financial assets
  • Derecognition of financial assets and financial liabilities
    • Evaluating the conditions for derecognising financial assets and financial liabilities
    • Evaluating transfer of a financial asset that qualify for derecognition
    • Identifying modification of substantial terms that trigger the derecognition of a financial liability
Chapter 4 Classification
  • Classification and reclassification differences between old and new Standards
  • Practical application of the ‘business mode’ and the ‘contractual cash flows’ concepts with practical case studies to determine whether an investment in financial assets shall be classified as:
    • Fair value through profit or loss
    • Fair value through other comprehensive income
    • Amortised cost method
  • The fair value options for financial assets and financial liabilities
  • Treatment for derivatives embedded in an investment in financial assets
Chapter 5 Measurement and accounting
  • The initial fair value measurement and accounting
  • Subsequent measurement and accounting for financial assets measured at:
    • Amortised cost method under various contractual provision
    • Fair value through profit or loss and fair value through other comprehensive income
  • Impairment of financial assets:
    • Transition from ‘incurred loss model’ to the ‘expected loss model’
    • How to identify expected credit loss
    • How to apply the expected credit loss model to short-term receivables
    • Applying the amortised cost method after recognition of impairment losses
Chapter 6 Hedge Accounting
  • Explain the improved hedge accounting procedures and highlight the differences between the old and new Standards
  • Overview of accounting for the three types of hedges (cash flow, fair value, and net investment)
Chapter 7 Effective Date and Transition
  • Examining the transitional provisions of the new Standard
MFRS/IFRS16 Leases

The overall technical issues
  • Scope of the Standard
  • Identification of a lease – determining whether a contract contain a lease element
  • Short-term lease Vs. long-term lease
  • Low value lease of assets
Lessee accounting:
  • Determining the lease term and the amount of lease payments
  • Determining the right-of-use assets and the corresponding lease liabilities
  • Presentation and disclosure
Lessor accounting:
  • Classifying finance lease and operating lease
  • Recognition and measurement issues
Lease of properties
  • Present value of the minimum lease payments
  • Determining the discount rate
  • The accounting profile for lessor and lessee
Sale and lease back transactions
  • Deciding whether a transfer of asset is a sale
  • Accounting when transfer of asset is a sale and when it is not a sale
Day 2

MFRS/IFRS15 Revenue from Contracts with Customers

Practical Case Studies To Applying The Five Steps Approach:
  • Step 1 Identifying and assessing existence of a contract with customers
  • Step 2 Establish present obligation(s) in the contracts
  • Step 3 Determining the transaction price
  • Step 4 Allocating the transaction price
  • Step 5 Recognize revenue upon transfer of control
Recognition Issues
  • Dealing with “revenue contract”
    • What is a contract and how to identify the existence of such contracts
    • Deciding how to combine separate contracts for revenue recognition
    • Contractual terms that are outside the scope of the revenue
    • How to deal with contract modifications
  • Dealing with “performance obligations”
    • Checking the ‘promises’ within the contractual terms
    • Identifying “performance obligations” arising from the ‘promises’
    • Deciding goods or services that are distinct, a bundle of distinct or a series of distinct
    • When “performance obligations” are satisfied by transfer of control – decide whether:
    • Is control transferred at a point in time or overtime
Measurement Issues
  • Transaction price
  • Identifying and determining transaction price
  • Dealing with significant financing component
  • Dealing with non-cash consideration
  • Allocation of transaction price to performance obligations
  • Allocating the transaction price to performance obligations
  • Deciding ‘stand-alone selling prices’ for allocation purposes
  • Allocation of discount
  • Variation to transaction price
Dealing With Contract Costs
  • What are incremental cost of obtaining a contract
  • Dealing with costs to fulfil a contract
  • Deciding the methods of amortising contract cost when revenue is recognised
  • Under what circumstances contract costs can be impaired
Presentation And Disclosure
  • Presenting revenue in the main financial statements
  • Qualitative and quantitative disclosure as follows:
  • Contracts with customers
  • Significant judgements used in applying this Standard
  • The entity’s performance under the contract
  • How entity determine the timing of satisfaction of performance obligations
  • Allocation of transaction price
  • Assets recognised from costs to obtain or fulfil a contract
Transitional Provisions
  • Dealing with transition of the new Standards
  • Choosing the full retrospective approach or modified retrospective approach

Expert Speaker

Danny Tan Boon Wooi has over 30 years of working experience in public practice, commerce and industry as a professional accountant and auditor. In the last 18 years, he is a partner of a consulting firm providing technical training and consultancy in IFRS and IPSAS (Accrual Accounting). He is currently a project manager with the Malaysian Accounting Standards Board in several projects. He is a member of the Government Accounting Standards Advisory Committee working on the implementation of Malaysia Public Sector Accounting Standards.

Danny holds an Honours Degree in Economics from England, an MBA in Finance from Scotland and a Master in Advanced Business Practice from Australia. He is a member of CIMA (UK), ACCA (UK), ISCA, MIA and CTIM.

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