axiata group berhad | annual report 2015
146
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(z) Non-current assets (or disposal groups) held-for-sale
Non-current assets (or disposal groups) are classified as assets held-for-sale when their carrying amount is to be recovered principally through a
sale transaction and a sale is considered as highly probable. They are stated at the lower of carrying amount and FVLCS.
(aa) Government grants
As a Universal Service Provider (“USP”), the Group is entitled to claim certain qualified expenses from the relevant authorities in relation to USP
projects. The claim qualifies as a government grant and is recognised at fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
Government grants relating to costs are recognised in the profit of loss over the period necessary to match themwith the costs they are intended
to compensate.
Government grants relating to the purchase of assets are included in non-current liabilities as deferred income and are credited to the profit or
loss on the straight line basis over the expected life of the related assets.
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
(a) Critical judgements in applying the Group’s and Company’s accounting policies
In determining and applying accounting policies, judgement is often required in respect of items where the choice of specific policy could
materially affect the reported results and financial position of the Group and the Company. The following accounting policies require subjective
judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Intangible assets – Acquired telecommunication licences with allocated spectrum rights
The Group has applied judgement in determining the treatment of the annual fees payable over ten (10) years in respect of a 3G spectrum
license granted to a foreign subsidiary. The annual fee is charged to the profit or loss when incurred based on management’s judgement that
future annual fees will no longer be payable upon the decision by the subsidiary to return the license. The Group considers the prepaid annual
payment to be usage fees based on interpretation of the license conditions, written confirmation from the Directorate General of Post and
Telecommunication, Indonesia and current financial year assessment of 3G operations. The prepaid annual fees are therefore not considered part
of the acquisition cost of the license.
Should the regulations and conditions with regards to the payment of the annual fees be amended in the future with the consequence that
payment of the remaining outstanding annual fees cannot be avoided upon the subsidiary surrendering the license, the Group will recognise an
intangible asset and a corresponding liability at the present value of the remaining annual fees at that point in time.
Intangible assets – Estimated useful life of telecommunication licenses with allocated spectrum rights
The telecommunication licenses with allocated spectrum rights acquired by a subsidiary via business combination during the financial year are
not subject to amortisation and are tested annually for impairment as the Group in the opinion that the licenses can be renewed in perpetuity
at negligible cost and the associated spectrum rights, similar to land, have an indefinite economic useful life. The estimated indefinite economic
useful life reflects the Group’s expectation of the period over which the Group will continuously recover the benefits from the licenses.
(b) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related
actual results. The Group, and to a large extent the activities, are governed by the legal, regulatory and business environment in the countries
which the Group operates in and which the Group has investments in. The business of the Group is subject to a number of risks, many of which
are beyond the Group’s control.
