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Section 06 Financial Statements
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2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
2.4 Summary of significant accounting policies (cont’d.)

(m) Insurance Contract/Takaful Certificate Liabilities (cont’d.)
These liabilities comprise premium/contribution liabilities and claims liabilities. (cont’d.)
(ii) Claims liabilities (cont’d.)

The liability is calculated at the reporting date by an independent actuarial firm using projection techniques
that included risk margin for adverse deviation. The liabilities are derecognised when the contract expires, is
discharged or cancelled.
Claim liabilities are not discounted.
(n) Government Fund - Malaysian Kitchen Financing Facility (“MKFF” or “the Fund”)

The primary objective of the Fund is to encourage Malaysian companies involved in the food and beverages industry
to venture abroad. In this respect, the Bank received funds from the Government of Malaysia (“the Government”)
to be disbursed as loans and financing.
The total placement amount and the interest income/profit shall be refunded to the Government upon expiry of
the agreement. The interest income/profit earned on the loans financed by the Government funds and from the
investment of the unutilised fund are recognised as amount payable to the Government in accordance with the
placement agreement and are classified under other payables.

The Bank received in return, a management fee of 1.5% of the total placement amount. The fee income is
recognised in the statement of profit and loss in accordance with Note 2.4(o)(iii). Credit losses or charges as a result
of loan default are shared based on agreed ratio between the Bank and the Government of Malaysia. The portion of
allowance for losses on loans and financing borne by the Bank is recognised in the statement of profit and loss in
accordance with Note 2.4(g).

(o) Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which the Group and the Bank expect to
entitled when a performance obligation is satisfied. Revenue is recognised either over time or at a point in time.
Revenue is measured at the fair value of consideration received or receivable.
(i) Interest/profit and similar income and expense

For all financial instruments measured at amortised cost and interest bearing financial assets at FVOCI, interest
income or expense is recorded using the effective interest rate or effective profit rate, which is the rate
that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial
liability. The calculation takes into account all contractual terms of the financial instrument (for example,
repayment options) and includes any fees or incremental costs that are directly attributable to the instrument
and are an integral part of the effective interest rate, but not future credit losses.
For impaired financial assets where the value of the financial asset have been written down as a result of an
impairment loss, interest income/profit continues to be recognised using the rate of interest used to discount
the future cash flows for the purpose of measuring the impairment loss.
(ii) Dividend income

Dividend income is recognised when the right to receive payment is established.