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Financial Reports &
Governance HENGYUAN REFINING COMPANY BERHAD l ANNUAL REPORT 2023 105
Other Information

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.6 LEASES (continued)

Accounting by lessee (continued)
Lease liabilities (continued)
(b) Subsequent measurement of lease liabilities
After the commencement date, a lessee shall measure the lease liability by:
i) increasing the carrying amount to reflect the unwinding of interest on the lease liability incurred;
ii) reducing the carrying amount to reflect the lease payments made; and

iii) remeasuring the carrying amount to reflect any reassessment or lease modifications which result in a change
of any future variable lease payments or if there is a revision of in-substance fixed lease payments or a revision
in the lease term.
(c) Reassessment of lease liabilities
After the commencement date, a lease liability is remeasured when there is a change to the lease payments where
a revised discount rate is used if either:

i) a change in lease term due to the lessee exercises an option (purchase/termination/extension) in a different
way than the Company has previously determined was reasonably certain; or
ii) a change in lease term due to an event occurs that contractually obliged/prohibits the lessee from exercising
the option.
In contrast, the original discount rate shall be maintained and used to remeasure the lease liability to reflect changes
to lease payments if either:

i) a change in the amounts expected to be payable under a residual value guarantee; or
ii) a change in future lease payments resulting from a change in an index or rate used to determine those payments.

A lessee shall recognise the amount of the remeasurement of the lease liability as an adjustment to the
ROU asset. However, if the carrying amount of the ROU asset is reduced to zero and there is a further reduction
in the measurement of the lease liability, a lessee shall recognise any remaining amount of the remeasurement in
profit or loss.
Short term leases and leases of low value assets
Short term leases are leases with a lease term of 12 months or less. Low value assets comprise of small items such as
IT equipment. Payments associated with short term leases and leases of low value assets are recognised on a straight-line
basis as an expense in profit or loss.