INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
75.
N
O
T
E
S
T
O
T
H
E
F
I
N
A
N
CI
AL
ST
AT
E
M
ENTS
For the financial year ended 31 December 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.3
Standards issued but not yet effective (cont’d)
Amendments to FRS 16 and FRS 41
Agriculture – Bearer Plants
The amendments change the accounting requirements for biological assets that meet the definition of bearer plants.
Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the
scope of FRS 41. Instead, FRS 16 will apply. After initial recognition, bearer plants will be measured under FRS 16 at
accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). However,
the agricultural produce growing on bearer plants will remain within the scope of FRS 41 to be measured at fair
value less costs to sell. For government grants relating to bearer plants, FRS 20 Accounting for Government Grants
and Disclosure of Government Assistance will apply. Amendments to FRS 16 and FRS 41 are effective for financial
periods beginning on or after 1 January 2016, with early adoption permitted. These amendments may be applied
retrospectively. Alternatively, an entity may elect to measure a bearer plant at its fair value at the beginning of the
earliest period presented. The fair value would be used as its deemed cost at that date.
Based on the Group’s preliminary assessment, the financial impact to the balance sheet of the Group as at
1 January 2016 upon the adoption of these amendments is estimated to a decrease to biological assets and deferred
tax liabilities of approximate Rp4.4 trillion and Rp1.0 trillion, respectively, with a corresponding decrease of
Rp3.4 trillion in total equity.
FRS 115
Revenue from Contracts with Customers
FRS 115 establishes a five-step model that will apply to revenue arising from contracts with customers. Under FRS 115,
revenue is recognised at an amount that reflects the consideration which an entity expects to be entitled in exchange
for transferring goods or services to a customer. The principles in FRS 115 provide a more structured approach to
measuring and recognising revenue when the promised goods and services are transferred to the customer i.e. when
performance obligations are satisfied.
Key issues for the Group include identifying performance obligations, accounting for contract modifications, applying
the constraint to variable consideration, evaluating significant financing components, measuring progress toward
satisfaction of a performance obligation, recognising contract cost assets and addressing disclosure requirements.
Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017
with early adoption permitted.
FRS 109
Financial Instruments
FRS 109 introduces new requirements for classification and measurement of financial assets, impairment of financial
assets and hedge accounting. Financial assets are classified according to their contractual cash flow characteristics
and the business model under which they are held. The impairment requirements in FRS 109 are based on an expected
credit loss model and replace the FRS 39 incurred loss model. Adopting the expected credit losses requirements will
require the Group to make changes to its current systems and processes.
The Group currently measures its investments in unquoted equity securities at cost. Under FRS 109, the Group will be
required to measure the investment at fair value. Any difference between the previous carrying amount and the fair
value would be recognised in the opening retained earnings when the Group applies FRS 109.
FRS 109 is effective for annual periods beginning on or after 1 January 2018 with early application permitted.
Retrospective application is required, but comparative information is not compulsory.
