Eng - IOI Group

Notes To The Financial Statements cont’d3. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (“FRSs”) AND AMENDMENTS TO FRSscont’d3.3 Impact of FRSs and Amendments to FRSs adopted cont’d3.3.6 FRS 121: The Effect of Changes in Foreign Exchange Ratesi. Exchange differences on a monetary item that forms part of the Company’s net investment in a foreign operationPrior to 1 July 2006, exchange differences arising on a monetary item that forms part of the Company’s net investmentin a foreign operation, regardless of the denomination of the currency of the monetary item, were recognised in equityin the Company’s financial statements.Under the revised FRS 121, such exchange differences are now recognised in income statement.This change in accounting policy has been accounted for retrospectively. Accordingly, certain comparatives have beenrestated as disclosed in Note 3.5.The financial impacts for the adoption of the revised FRS 121 to the Company are as follows:Company2007 2006RM’000 RM’000Income statement(Decrease)/increase in operating profit (4,856) 12,725Balance sheetCumulative decrease in retained earnings (36,515) (31,659)Cumulative increase in foreign currency translation reserve 36,515 31,659The change in accounting policy has no financial impact to the Group.ii.Goodwill and fair value adjustmentsPrior to 1 July 2006, goodwill arising on the acquisition of a foreign operation and fair value adjustments to thecarrying amounts of assets and liabilities arising on such an acquisition were deemed to be assets and liabilities of theparent company and were translated using exchange rate at the date of acquisition.Under the revised FRS 121, goodwill and fair value adjustments arising on the acquisition of a foreign operation arenow treated as assets and liabilities of the foreign operation and are translated at the closing rate.In accordance with the transitional provisions of FRS 121, the Group has applied this change in accounting policyprospectively to all acquisitions occurring after 1 January 2006. The change in accounting policy, therefore, has hadno impact on amounts reported for financial year ended 30 June 2006 and prior periods. There was also no materialeffect on the financial statements of the Group for the current financial year.139ANNUAL REPORT 2007IOI Corporation Berhad