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Axiata Group Berhad | Annual Report 2016
FINANCIAL STATEMENTS
146
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(r) Leases (continued)
Accounting by lessee (continued)
(i) Finance leases (continued)
Deferred gain from sale and finance lease back transaction is amortised using straight line method over the lease period.
Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying amount of the leased
assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease expense.
(ii) Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the profit or loss on a straight-line basis over the lease period.
Gain from sale and operating lease back transaction is directly recognised when the transaction occurs.
Initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in profit or loss when incurred.
Accounting by lessor
(i) Finance leases
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference
between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is
recognised over the term of the lease using the net investment method so as to reflect a constant periodic rate of return.
(ii) Operating leases
When assets are leased out under an operating lease, the asset is included in the statements of financial position based on the nature
of the asset.
Initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in profit or loss when incurred.
(s) Revenue recognition
The Group’s operating revenue comprises the fair value of the consideration received or receivable for the sale of products and rendering of
services net of returns, duties, sales discounts and sales taxes paid, after eliminating sales within the Group. The Group’s and the Company’s
operating revenues are recognised or accrued at the time of the provision of the products or services.
(i) Mobile and interconnect services revenue
Revenue from mobile telephony services are recognised based on actual traffic volume, net of rebates or discounts.
Revenue from sales of prepaid starter packs and prepaid phone cards are deferred (as disclosed as deferred revenue in trade and other
payables) and recognised as revenue based on the actual use of the cards, net of taxes and discounts. Any amounts not recognised are
deferred, after which such amounts will be recognised as revenue.
Revenue from interconnection with other operators is recognised on the basis of actual recorded call traffic.
(ii) Lease and services of passive infrastructure
Lease revenue is generated from the leasing of space on the Group’s telecommunication towers, where the customers install and
maintain their individual communication network equipment. Lease revenue from operating lease is recognised on a straight-line basis
over the fixed and non-cancellable term of the lease agreement, irrespective of when the payments are due.