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SUSTAINABILITY EFFECTIVE CORPORATE FINANCIAL ADDITIONAL DETAILS OF THE ANNUAL
REPORT LEADERSHIP GOVERNANCE STATEMENTS INFORMATION GENERAL MEETING

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

2 BASIS OF PREPARATION (CONTINUED)

(ii) Accounting pronouncements that are not yet effective and have not been early adopted by the Group and Company:
Effective for annual periods beginning on or after 1 January 2022
• Amendments to MFRS 116 ‘Proceeds before Intended Use’
• Annual improvements to MFRS 1 ‘Subsidiary as First-time Adopter’
• Annual improvements to Illustrative Example Accompanying MFRS 16 Leases: Lease Incentives
• Annual improvements to MFRS 141 “Taxation in Fair Value Measurements”
• Annual improvements to MFRS 9 ‘Fees in the ’10 per cent’ test for Derecognition of Financial Liabilities’ 145
• Amendments to MFRS 137 ‘Onerous Contracts - Cost of Fulfilling a Contract’
Effective annual periods beginning on or after 1 January 2023

• Amendments to MFRS 101 ‘Classification of liabilities as current and non-current’
The accounting pronouncements that are not yet effective are not expected to have any significant impact on the
financial statements of the Group and Company.

3 SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
consistently applied to all the financial years presented, unless otherwise stated:
(a) Basis of consolidation and investment in subsidiaries
The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up
to the end of financial year. Subsidiaries are all entities (including structured entities) over which the Group has control.
The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Acquisition accounting

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the
former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes
the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of the
non-controlling interests. The Group recognises any non-current controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the
recognised amounts of acquiree’s identifiable net assets. At the end of reporting period, non-controlling interests
consists of amount calculated on the date of combinations and its share of changes in the subsidiary’s equity since the
date of combination.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is re-measured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised
in accordance with MFRS 9 in profit or loss. Contingent consideration that is classified as equity is not re-measured,
and its subsequent settlement is accounted for within equity.