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FINANCIAL STATEMENTS
Axiata Group Berhad | Annual Report 2016
149
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t) Employee benefits (continued)
(vi) Cash-Based Long Term Incentive (“LTI”) compensation
The Group and the Company recognise a liability and an expense for cash-based long term incentive compensation and over the vesting
period, based on a formula that takes into consideration the number of employees, a performance multiplier and discount rate. Provision
is recognised when the Group and the Company have a present legal or constructive obligation as a result of past events.
(u) Deferred revenue
Deferred revenue comprises:
(i)
The unutilised balance of airtime, data and access fee in respect of prepaid cards sold to customers. Such revenue amounts are
recognised as revenue upon utilisation of airtime and activation of access right by the customer.
(ii) The value of advance billings made to customers in respect of the rental of fibre optic network. Such amounts are recognised as revenue
systematically over the period covered by the advance billings.
(v) Indefeasible right of use (“IRU”)
The Group has entered into certain IRU agreements with its customers. An IRU is a right to use a specified amount of capacity for a specific
time period that cannot be revoked or voided. Such agreements are accounted for either as lease or service transactions.
Those IRU agreements that provide the lessee with exclusive right to the purchased capacity and limit the purchased capacity to a specified
fibre are accounted as lease transactions. Other IRUs are accounted for as service contracts.
IRU agreements that transfer substantially all the risks and rewards of ownership to the lessee are classified as sale-type leases. All other IRU
leases are classified as operating leases.
(w) Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates. The consolidated financial statements are presented in RM, which is the Company’s functional
and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities (inclusive of advances to subsidiaries
treated as quasi-investments) denominated in foreign currencies are recognised in profit or loss. However, exchange differences are
deferred in OCI when they arose from qualifying cash flow or net investment hedges or are attributable to items that form part of the
net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the profit or loss within ‘finance cost’. All other foreign
exchange gains and losses are presented in profit or loss within ‘foreign exchange gains/(losses)’.
Changes in the fair value of monetary securities denominated in foreign currency classified as AFS are analysed between translation
differences resulting from changes in the amortised cost of the securities and other changes in the carrying amount of the securities.
Translation differences related to changes in amortised cost are recognised in the profit or loss for the financial year, and other changes
in carrying amount are recognised in OCI.