2. Significant accounting policies (CONT’D.)
2.5 Summary of significant accounting policies (cont’d.)
(u) Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered
into and the definitions of a financial liability.
Financial liabilities are recognised in the statements of financial position when, and only when, the
Group and the Company become a party to the contractual provisions of the financial instrument. The
Group and the Company financial liabilities are classified as other financial liabilities.
The Group and the Company’s other financial liabilities include payables and borrowings.
Payables are recognised initially at fair value plus directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently
measured at amortised cost using the effective interest method. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. 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 a derecognition of the original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in profit or loss.
(v) Segment reporting
The principal activities of the Group are the cultivation of oil palms, production and sale of fresh fruit
bunches, crude palm oil and palm kernel in Malaysia. The Group’s plantation business are segregated
into three geographical segments. Performance of the segments is monitored by the respective
segment’s management team. Additional disclosures on the segment reporting is disclosed in Note
37, including the factors used to identify the reportable segments and the measurement basis of
segment information.
(w) Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s)
not wholly within the control of the Group and the Company.
Contingent liabilities and assets are not recognised in the statements of financial position of the
Group and the Company.
n otes to th e f i nan c i a l statements
Bo ustead plantati o ns Berhad
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