The Conceptual Framework for Financial Reporting and Malaysian Financial Reporting Standards.

In March 2018 the International Accounting Standards Board (IASB) published a revised Conceptual Framework for Financial Reporting (2018 Conceptual Framework). The 2018 Conceptual Framework clarifies and updates the guidance published in 1989 and updated in 2010. It also fills gaps in areas where there was no or only little guidance. The 2018 Conceptual Framework addresses the objective of general-purpose financial reporting; qualitative characteristics of useful financial information; financial statements and the reporting entity; the elements of financial statements; recognition and derecognition; measurement; presentation and disclosure and concepts of capital and capital maintenance. The 2018 Conceptual Framework, is effective for accounting periods beginning on or after 1st January 2020.

Case Study

Gold Hardrock Bhd (GHB) was established in Malaysia in 2018 as a manufacturer manufacturing computer hardware.

In 2021, GHB incurred the following expenses to build its office building:

Expenses	Amount (RM)
Cost of construction material used	500,000
Labor cost	250,000
Other expenses	100,000
Advance to material suppliers	100,000
Cost of construction material on hand	50,000

GHB has hosted its operation on the on-premise infrastructure since 2018. The Board of Directors was tired of endless software bugs and server glitches and decided to switch its IT infrastructure from on-premise to cloud computing in July 2021. GHB incurred the following costs to implement the cloud computing system:

(1) Data cleansing and transfer

(2) Training of employees

(3) Configuration of the cloud service software including the setting of flags and setting the parameters of the software.

(4) Creating the interface between the various Enterprise Resource Planning (ERP) tools, portal, and reporting capabilities (GHBs software engineers developed the interface, and they designed the interface that fits GHBs operation system requirements. GHB has control over the cloud computing software.

Questions:

(i) The accounting treatment for the expenses incurred to implement the cloud computing in GHB in accordance with the relevant accounting standards. (400words)

(ii) The accounting treatment of the on-premise software in accordance with the applicable accounting standards. (400words)