Page 131 - Exim iar24_Ebook

EXIM BANK MALAYSIA ANNUAL REPORT 2024

7 FINANCIAL STATEMENTS 129
NOTES TO THE FINANCIAL STATEMENTS

2. MATERIAL ACCOUNTING POLICY INFORMATION (cont’d)

2.4 Summary of material accounting policy information (cont’d)
(h) Financial liabilities (cont’d)

Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability.

(i) Cash and cash equivalents
Cash and cash equivalents consist of cash and bank balances, deposits and placements with banks and other
financial institutions, with original maturity of 3 months or less.

For the purpose of the cash flow statements, cash and cash equivalents are presented net of bank overdrafts and
pledged deposits, if any.

(j) Provisions
Provisions are recognised when the Group and the Bank have a present obligation (legal or constructive) as a result
of a past event and it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate of the amount can be made.
When the Group and the Bank expect some or all of a provision to be reimbursed, for example, under an insurance
contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.
The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.
Where the effect of the time value of money is material, the amount of the provision is the present value of the
expenditure expected to be required to settle the obligation. Any increase in the provision which due to the passage
of time is recognised in the statement of profit or loss.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits
is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of
one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic
benefits is remote.

(k) Financial guarantee contracts
Financial guarantees are contracts that require the Group and the Bank to make specified payment to reimburse
the holder for a loss it incurs because a specified party fails to meet its obligation when it is due in accordance
with the contractual terms. In the ordinary course of business, the Group and the Bank give financial guarantees,
consisting of letters of credit, guarantees and acceptances. Where the Group and the Bank enter into such contracts,
the guarantee contract is treated as a contingent liability until such time as it becomes probable that the Group and
the Bank will be required to make a payment under the guarantee.
Financial guarantees premium are initially recognised at fair value on the date the guarantee was issued,
and presented as ‘deferred income’ in the statements of financial position. Subsequent to initial recognition,
the received premium is amortised over the life of the financial guarantee on a straight line basis.