Page 131 - EXIM-Bank_Annual-Report-2022

A VISION COMMITMENT EMPOWERING ENSURING ENHANCING FINANCIAL
TO SERVE TO LEAD GROWTH SUSTAINABILITY GOVERNANCE STATEMENTS 129

Notes to the fiNaNcial statemeNts

2. sIGNIFICANt ACCouNtING PoLICIes (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)

(q) Foreign currencies (cont’d.)
Transactions in foreign currencies are translated to the functional currencies of the Group’s entities at their
respective functional currency spot rates at the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in statement of profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss
arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the
gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain
or loss is recognised in other comprehensive income or statement of profit or loss are also recognised in other
comprehensive income or statement of profit or loss, respectively).

(r) Foreclosed properties
Foreclosed properties are those acquired in full or partial satisfaction of debts and are stated at the lower of cost
and fair value.

(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.

(v) Insurance receivables
Insurance receivables are recognised when due and measured on initial recognition at fair value. Subsequent to
initial recognition, insurance receivables are measured at amortised cost, using the effective yield method.
If there is objective evidence that an insurance receivable is impaired. The Group and the Bank reduce the carrying
amount of the insurance receivable accordingly and recognised that impairment loss in statement of profit and loss.
Objective evidence of impairment for insurance receivables and the determination of consequential impairment
losses.
Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in
Note 2.4(f), have been met.