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FINANCIAL STATEMENTS
Axiata Group Berhad | Annual Report 2016
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3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i) Inventories (continued)
Net realisable value represents the estimated selling price in the ordinary course of business, less all estimated costs to completion and
applicable variable selling expenses. In arriving at the net realisable value, due allowance is made for all obsolete and slow moving items.
(j) Trade receivables and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Other receivables
generally arise from transactions outside the usual operating activities of the Group and the Company. If collection is expected in one (1) year
or less (or in the normal operating cycle of the business if longer), they are classified as current assets. Otherwise, they are presented as non-
current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less accumulated impairment losses.
(k) Cash and cash equivalents
For the purpose of the statement of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather
than for investment or other purposes. Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other
short term, highly liquid investments with original maturities of three (3) months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management are included as a component of
cash and cash equivalents in the statement of cash flows. Bank overdrafts are included within borrowings in current liabilities in the statements
of financial position.
(l) Trade payables
Trade payables represent liabilities for goods or services provided to the Group prior to the end of financial year which are unpaid. Trade
payables are classified as current liabilities unless payment is not due within twelve (12) months after the reporting period. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
(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 prepayment 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) Current and deferred tax
Tax expense for the period comprises current and deferred income tax. The income tax expense or credit for the period is the tax payable on
the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and to unused tax losses. Tax is recognised in profit or loss, except to the extent that it
relates to items recognised in OCI or directly in equity. In this case the tax is also recognised in OCI or directly in equity, respectively.