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118 EXIM BANK MALAYSIA
Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS

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

(r) Foreign currencies
The Group’s consolidated financial statements are presented in Malaysian Ringgit, currency which is also the Bank’s
(i.e. parent company’s) functional currency. For each entity, the Group determines the functional currency and items
included in the financial statements of each entity are measured using that functional currency. The Group uses the
direct method of consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or
loss reflects the amount that arises from using this method.

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 and 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 and loss are also recognised in other
comprehensive income or statement of profit and loss, respectively).
(s) 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.
(t) 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.

(u) 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.

(v) Leases
Right-of-use assets are classified as assets and measured at cost, less any accumulated depreciation and impairment
losses disclosed in Note 16.
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 18.