axiata group berhad | annual report 2015
139
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using
the effective interest method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the profit
or loss over the period of the borrowings.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of
the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extend there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of
the facility to which it relates.
Borrowings are classified as current liabilities unless the Group and the Company have an unconditional right to defer settlement of the liability
for at least twelve (12) months after the end of the reporting period.
(n) Put option liability over shares held by non-controlling interest
A contract that contains an obligation for the Group to deliver cash or other financial asset in exchange for its own (or its subsidiary’s) equity
shares is a financial liability.
The initial corresponding redemption liability is recognised as “Other Reserve” in equity as a reduction of the Group’s equity if the risk and
rewards of ownership remain with the non-controlling interest or a reduction of non-controlling interest’s equity if the risk and rewards of
ownership transferred to the Group. Subsequently, the put option is re-measured at fair value as a result of changes in the expected liability
with any resulting gain or loss recognised in the profit or loss. In the event that the option expires, the put option liability is derecognised with a
corresponding adjustment to equity.
(o) Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly
in equity respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in
the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred tax liability where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not be reversed
in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only where there is an
agreement in place that gives the Group the ability to control the reversal of the temporary difference not recognised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and
when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where there is an intention to settle the balances on a net basis.
