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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

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j) Inventories
Inventories which consist of raw materials, work-in-progress, finished goods, molasses and consumables are stated
at lower of cost and net realisable value.

Cost is determined on the weighted average cost basis. Raw material cost comprises the landed cost of goods purchased
and in the case of work-in-progress and finished goods, includes materials, direct labour, other direct charges and an
appropriate proportion of factory overheads. Consumables comprise the actual purchase costs.
Net realisable value is the estimated selling price in the ordinary course of business, less selling and distribution costs
and all other estimated cost to completion. 155
(k) Impairment of non-financial assets
Assets that have an indefinite useful life for example goodwill or intangible asset not ready to use, are not subject to
amortisation and are tested annually for impairment, or when events or circumstances occur indicating that impairment
may exist. Property, plant and equipment and other non-current non-financial assets, including intangible assets with
definite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount.
The impairment loss is charged to profit or loss. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
there are separately identifiable cash flows (cash generating units). Impaired assets, except goodwill, are reviewed for
possible reversal of impairment at each reporting date and is recognised in profit or loss.
The reversal is recognised to the extent of the carrying amount of the asset that would have been determined
(net of amortisation and depreciation) had no impairment loss been recognised.
(l) Current and deferred income taxes
Tax expenses for the year comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent
that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
Current and deferred tax is measured using the tax rates that have been enacted or substantively enacted at the
statement of financial position date in the countries where the Group’s subsidiaries operate generate taxable income.

Deferred tax is provided for on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that
future taxable profit will be available against which the deductible temporary differences and unused tax losses can
be utilised.
Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred
income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the
same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.