MASB amends

E-newsletter definition of private

entity
Solution Engineering Berhad. 27/3/2017

On 28 February 2017,
Malaysian Accounting
Local Standard Board (MASB) Updates
made a notice on
Bursa amendments on Malaysia issues MD&A Guide
On 13 March 2017, definition of a private understanding regarding on
Bursa Malaysia entity. relevant operating performance,
issued a Management risk and reward, the outlook and
Discussion and The focus under the new future expectations of the
Analysis (MD&A) definition is that an company.
disclosure guide. The additional paragraph is
guideline will aid The guideline was constructed by
added, a private
public listed company Bursa after discussion with
company, which is
in preparing and various industry leader. The
subsidiary, associate of,
presenting their guide stated the principles and
or jointly controlled by an
MD&A disclosure, requirements for the MD&A
entity that is a
which will assist disclosure, as well as examples
management company
shareholders and of a good disclosure that meet the
as defined as section 2
investors have better expectations for the companys
Interest Scheme Act
investor and stakeholder.
2016 is not a private
entity.
Companies Act 2016 Effective on 31 January
With the act effective on 31 January 2018, the following are the
highlights of the updated act.

A private company may now have only one shareholder and one
director, enjoying benefits of limited liability, separate entity, and
separate income from the company income.

Besides, no authorized capital and no par value for shares

after the effective date of the act. It is do reduce the hassle to
increase the authorized share capital when issuing new shares. Companies are free to issue share at any value that the
investors are willing to pay.

On 10 February, Companies Commission of Malaysia (SSM) issued a practice note 1/2017 to clarify the utilization of
outstanding share premium account under Section 618, which states that within 24 months, a company must either
use the outstanding share premium to provide premium for redemption of debentures, or write off preliminary
expenses or expenses related to issuance of shares, announce bonus issue, or pay dividends declared if such
dividends are satisfied by share issue to the shareholder.

International Updates
AASB issues new interpretation on foreign currency transactions
On 1 March 2017, The Australian Accounting Standards Board (AASB) issued a new interpretation, Interpretation 22
to decide how to determine the date of transaction and exchange rates of foreign currency transaction.

Under the new interpretation, when making an advance payment for an item, an entity is required to recognize it as a
non-monetary asset at the date of the advance payment using the spot exchange rate. Later when the goods is
delivered, the entity then derecognize the non-monetary asset and then recognize the asset (ie. Machinery) cost using
the exchange rate of the date of advance payment made.

The new interpretation is subject to be effective on 1 January 2018 and although our firm does not involves in foreign
transactions frequently, staff should take note of this development when several occasions when foreign transaction is
needed.

FASB issues ASU for reporting Non employees share payment

Earlier on 3 March 2017, The Financial Accounting Standard Board announced a proposed Accounting Standards
Update (ASU) which focus on the issue of Non-employees share payment.

The Update announced would expand the coverage of the Topic 718 Share Compensation. The said topic currently
covers common stock compensation to employees and would extend to the scenario of share compensation to non-
employees in exchange of goods and services. The proposed ASU is likely to replace Subtopic 505 Equity-Equity
Based Payments to employees.
The aim of the update is to reduce the hassle and cost while improving financial reporting for non-employee share
payment. Effective Date for the changes will be decided after the comment period.

FASB ASU simplifies the test for Goodwill Impairment

On January 2017, The Financial Accounting Standard Board (FASB) decided the amendments for the Topic 350
Intangibles-Goodwill and Other. The aim of this amendment is to simplify the complexity of impairment test for
goodwill which should be done at least once annually.

This update will affect public business entities and other entities that have goodwill reported in their financial
statements. Prior to this amendment, a two-step analysis is required for the impairment of goodwill. The amendment
will compound the relatively complex two steps method into a quantitative impairment test. Therefore, the cost of
complexity of evaluating goodwill for impairment should be reduced.

A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the
amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after
December 15, 2019. For not SEC filer public business entity is December 15, 2020. For all other entities is December
15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates
after January 1, 2017.

Bibliography
AASB Interpretation, 2017. Foreign Currency Transactions and. [Online]
Available at: http://www.aasb.gov.au/admin/file/content105/c9/INT22_02-17.pdf

CPA Malaysia, 2017. MICPA TECHNICAL UPDATES. [Online]

Available at: http://www.micpa.com.my/v2/wp-
content/uploads/2017/03/CPA.eNewsline.March_.2017.pdf

CPA Malaysia, 2017. MICPA TECHNICAL UPDATES. [Online]

Available at: http://www.micpa.com.my/v2/wp-
content/uploads/2017/02/CPA.eNewsline.February.20171.pdf

Financial Accounting Standard Board, 2017. Proposed Accounting Standards Update.

[Online]
Available at: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1176168873667&acceptedDisclaimer=true
 Financial Accounting Standard Board, 2017. Simplifying the Test for Goodwill
Impairment. [Online]
Available at: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1176168778106&acceptedDisclaimer=true

Malaysian Accounting Standard Board, 2017. Notice Of Issuance / Amendments.

[Online]
Available at: http://masb.org.my/pdf.php?pdf=Amendments%20to
%20MPERS.pdf&file_path=pdf_file

NEWS STRAITS TIMES, 2017. Bursa Malaysia Unveils MD&A Guide. 14 March.

Suruhanjaya Syarikat Malaysia, 2017. COMPANIES ACT 2016: PRACTICE NOTE NO.
1/2017. [Online]
Available at: http://www.ssm.com.my/sites/default/files/public_practice_notes/pn1-
2017_r1.pdf

Suruhanjaya Syarikat Malaysia, n.d. Laws of Malaysia Act 777 Companies Act 2016.
[Online]
Available at:
http://www.ssm.com.my/sites/default/files/companies_act_2016/aktabi_20160915_com
paniesact2016act777_0.pdf
[Accessed 18 March 2017].

The Sun (Malaysia), 2017. Companies Act 2016 - a game changer in 2017. 3 January.