Page 226 - 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 (CONT’D.)
2.2 Material accounting policy information (cont’d.)

(k) Impairment of non-financial assets (cont’d.)
Impairment losses are recognised in the statements of profit or loss. An assessment is made at each reporting
date as to whether there is any indication that previously recognised impairment losses may no longer exist
or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in
the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.
If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase
cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised previously. Such reversal is recognised in statements of profit or loss. Impairment loss on
goodwill is not reversed in a subsequent period.
(l) Cash and cash equivalents

Cash and cash equivalents consist of bank balances with banks and other financial institutions, and short
term deposits with original maturity tenor of less than three (3) months that are readily convertible to known
amount of cash and which are subject to an insignificant risk of changes in value.

(m) Contingent liabilities and contingent assets
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.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group
and the Bank. The Group and the Bank do not recognise contingent assets but discloses its existence
where inflows of economic benefits are probable, but not virtually certain.

(n) Employee benefits
(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in
which the associated services are rendered by employees of the Group and the Bank. Short term
accumulating compensated absences such as paid annual leave are recognised when services are
rendered by employees that increase their entitlement to future compensated absences. Short term
non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Defined contribution plan

Defined contribution plans are post-employment benefit plans under which the Group and the Bank
pay fixed contributions into separate entities or funds and will have no legal or constructive obligation
to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits
relating to employee services in the current and preceding financial years. Such contributions are
recognised as an expense in the statements of profit or loss, as they are incurred. As required by law,
companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

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