The MFRS Framework applied to the majority of Malaysian entities, other than private entities, for annual periods beginning on or after 1 January 2012. However, 'Transitioning Entities', being those within the scope of MFRS 141 Agriculture (MFRS 141, equivalent to IAS 41 Agriculture) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15, equivalent to IFRIC 15 Agreements for Construction of Real Estate), together with parents, significant investors and venturers of those entities, were exempted from the MFRS Framework pending completion of the IASB's projects on revenue recognition and bearer plants.
In completing these two projects, the IASB issued IFRS 15 Revenue from Contracts with Customers on 28 May 2014, and the bearer plant amendments to IAS 41 and IAS 16 on 30 June 2014. The MASB subsequently announced that they expected to decide on a final application date of MFRS Framework to Transitioning Entities by the end of August.
The announcement of the January 2017 mandatory transitional date for Transitioning Entities follows a deliberative process of the MASB, and coincides with the effective date of MFRS 15/IFRS 15. Although the effective date of the bearer plant amendments apply from 1 January 2016, the MASB has decided to provide Malaysian agricultural industry participants the same preparation time frame as those in the real estate industry. The press release further notes the following:
The Board believes, after consulting with stakeholders, it would be pragmatic to prescribe a single date, i.e. 1 January 2017, as the mandatory date to changeover to the MFRS Framework for both industries. This is to avoid confusing users with [Transitioning Entities] financial statements prepared using different frameworks for the year 2016; in particular those entities involved in both property development and plantations... A single date would mitigate potential complexity in preparing consolidated financial statements by [Transitioning Entities] that are involved in both of these industries.
Although the MASB has set a mandatory effective date of 1 January 2017 for Transitioning Entities, such entities are permitted to apply the MFRS Framework to earlier accounting periods.
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