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2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Summary of significant accounting policies (cont’d)
(n) Government Fund – Malaysian Kitchen Financing Facility (“MKFF” or “the Fund”)
The primary objective of the Fund is to encourage Malaysian citizens and Malaysian companies involved in the food
and beverages industry to venture abroad. In this respect, the Bank received funds from the Government of Malaysia
(“the Government”) to be disbursed as loans.
The total placement amount and the interest income shall be refunded to the Government upon expiry of the
agreement. The interest income earned on the loans financed by the Government funds and from the investment of
the unutilised fund are recognised as amount payable to Government in accordance with the placement agreement.
The Bank received in return, a management fee of 1.5% of total placement amount. The fee income is recognised
in the income statement in accordance with Note 2.4(o)(iii). Credit losses or charges as a result of loan default are
shared based on agreed ratio between the Bank and the Government of Malaysia. The portion of allowance for loan
losses borne by the Bank is recognised in the income statement in accordance with Note 2.4(g)(i).
(o) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
Bank and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received
or measured.
(i) Interest and similar income and expense
For all financial instruments measured at amortised cost and interest/profit bearing financial assets classified
as available-for-sale, interest income or expense is recorded using the effective interest rate, which is the rate
that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial
liability. The calculation takes into account all contractual terms of the financial instrument (for example,
repayment options) and includes any fees or incremental costs that are directly attributable to the instrument
and are an integral part of the effective interest rate, but not future credit losses.
For impaired financial assets where the value of the financial asset have been written down as a result of
an impairment loss, interest/financing income continues to be recognised using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss.
(ii) Dividend income
Dividend income is recognised when the right to receive payment is established.
(iii) Fee income
Fee income from bank guarantee arrangement, management fee of MKFF and letter of credit is recognised on an
accrual basis.
EXIM Bank Annual Report 2013
121