Page 138 - Exim iar24_Ebook

EXIM BANK MALAYSIA
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NOTES TO THE FINANCIAL STATEMENTS

2. MATERIAL ACCOUNTING POLICY INFORMATION (cont’d)

2.4 Summary of material accounting policy information (cont’d)
(s) Sales and Service Tax

The Bank is subject to Sales and Service Tax (“SST”) Act 2019 and charges service tax on its taxable supply of
services made to customers such as domestic credit insurance premium/takaful contribution. Service tax is based
on payment basis, hence, the Bank is required to account and make payment on service tax every bi-monthly.

(t) Equity instruments
Ordinary shares are classified as equity. Dividend on ordinary shares is recognised and accounted for in equity in
the year in which they are declared.
RCCPS are classified as equity. Dividend on RCCPS is recognised at a fixed coupon rate of 4.7% per annum and
accounted for in equity in the year in which the Bank accrued.

(u) Leases
Right-of-use assets are classified as assets and measured at cost, less any accumulated depreciation and
impairment losses disclosed in Note 18.
Lease liabilities are classified as liabilities and measured at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments (including in-substance fixed payments) disclosed in
Note 20.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENT
The preparation of the financial statements involved making certain estimates, assumptions and judgements that affects the
accounting policies applied and reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the financial statement in the period in which the estimation is revised and
in any future periods affected. Significant areas of estimation, uncertainty and critical judgements used in applying accounting
policies that have significant effect on the amount recognised in the financial statements include the following:
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year,
are described below. The Group and the Bank based its assumption and estimates on parameters available when the financial
statements were prepared. Existing circumstances and assumptions about future developments, however, may change due
to market changes or circumstances arising that are beyond the control of the Group and the Bank. Such changes will be
reflected in the assumptions when they occur.

(a) Expected credit losses on loans, advances and financing and commitments and contingencies
The Group and the Bank review its individually significant loans, advances and financing and commitments and
contingencies at each reporting date to assess whether the Expected Credit Losses (ECL) should be recorded in statement
of profit or loss. In particular, judgement by management is required in the estimating of the amount and timing of
future cash flows when determining the expected credit losses. In estimation the cash flows, the Group and the Bank
makes judgement about the borrower’s or the customer’s financial situation and the net realisable value of collateral.
These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future
changes to the allowances.