Page 210 - Bank-Muamalat_Annual-Report-2023

BANK MUAMALAT MALAYSIA BERHAD

NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2023 (18 JAMADIL AKHIR 1445H)

2. MATERIAL ACCOUNTING POLICIES
2.1 Changes in material accounting policies

The Group and the Bank adopted amendments to MFRS 101, Presentation of Financial Statements and MFRS Practice
Statement 2 – Disclosures of Accounting Policies from 1 January 2023. The amendments require the disclosure
of ‘material’, rather than ‘significant’, accounting policies. The amendments also provide guidance on the application
of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting
policy information that users need to understand other information in the financial statements.
Although the amendments did not result in any changes to the Group’s accounting policies, it impacted the
accounting policy information disclosed in the financial statements. The material accounting policy information
is disclosed in the respective notes to the financial statements where relevant.

2.2 Material accounting policy information
(a) Investment in subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies
so as to obtain benefits from their activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group has such power over
another entity.

In the Bank’s separate financial statements, investments in subsidiaries are stated at cost less impairment
losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts
is recognised in statement of profit or loss.
(b) Financial assets

(i) Initial recognition and subsequent measurement
The Group and the Bank classify all of their financial assets based on the business model for managing
the assets and the assets’ contractual cash flow characteristics. All financial assets are recognised initially
at fair value plus directly attributable transaction costs, except in the case of financial assets recorded
at fair value through profit or loss.

The categories of financial assets under MFRS 9 Financial Instruments are as follows:
• Amortised cost;
• Fair value through other comprehensive income (“FVOCI”); and
• Fair value through profit or loss (“FVTPL”)
(1) Financial assets at amortised cost
The Group and the Bank measure financial assets at amortised cost if both of the following conditions
are met:
• The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and profit (“SPPP”) on the principal amount outstanding; and
• The financial asset is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows.

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