Connectionfees connection fees that are charged and

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ollected on behalf on the authorities. Revenues primarily comprise sale of • Services: subscription and traffic fees, connection fees, interconnection fees, roaming charges, fees for leased lines and leased networks, fees for data network services and fees for TV distribution and satellite services. • Customer equipment is primarily mobile devices/phones. subscription and traffic fees Revenues from subscription fees are recognised over the subscription period while revenues from voice and non-voice services are recognised upon actual use. Consideration from the sale of prepaid cards to customers where services have not been /page 28/ telenor annual report 2011 notes to the financial statements / telenor group rendered at the reporting date is deferred until actual usage or when the cards are expired or forfeited. Connection fees Connection fees that are charged and not allocated to the other elements of an arrangement are deferred and recognised over the periods in which the fees are expected to be earned. The earning period is the expected period of the customer relationship and is based on past history of churn and expected development in the individual Group companies. When connection fees are charged in multiple element arrangements where discounts are provided on other identifiable components in the transactions, the connection fees are allocated to sale of the discounted equipment or services, limited to the amount of the discounts, and recognised as revenues at the same time as the equipment or services are recognised as revenues. Customer equipment Revenues from sales of customer equipment are normally recognised when the equipment, including the related significant risks and rewards of ownership, is transferred to the buyer and the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold. Multiple element arrangements When the Group delivers multiple services and/or equipment as part of one contract or arrangement, the consideration is allocated to the separate identifiable components if the delivered item has value to the customer on a standalone basis and there is objective and reliable evidence of the fair value of undelivered items. The consideration is allocated between the elements based on their relative fair values, and recognition of the revenue allocated to the delivered item is limited to the amount that is not contingent on the delivery of additional items or other specified performance criteria. discounts Discounts are often provided in the form of cash discounts or free products and services delivered by the Group or by external parties. Discounts are recognised on a systematic basis over the period the discount is earned. Cash discounts or free products and services given as part of sales transactions are recognised as a reduction of revenue. Free products or services provided that are not related to sales transactions are recognised as expenses. Presentation The determination of whether the Group is acting as principal or agent in a transaction is based on an evaluation of the substance of the transaction, the responsibility for providing the goods or services and setting prices and the underlying financial risks and rewards. Where the Group acts as a principal, the revenues are recognised on a gross basis. This requires revenue to comprise the gross value of the transaction billed to the customers, after trade discounts, with any related expenses charged as operating costs. Where the Group acts as an agent, the expenses are offset against the revenues and the resulting net revenues represent the margins or commissions earned for providing services in the capacity of an agent. Revenues from roaming are recognised gross in line with general accepted accounting principles within the telecommunications industry. Revenues from transit traffic are recognised based on an evaluation of the substance in the agreement, and will be recognised gross or net depending on whether the Group acts as a principal or agent in the transactions. License fees payable to telecommunications authorities that are calculated on the basis of revenue share arrangements are not offset against the revenues. Instead, they are recognised as license costs because the Group is considered to be the primary obligor. interest and dividend income Interest income is accrued on a time proportion basis that reflects an effective yield on the asset. Dividend income from investments is recognised when the Group’s rights to receive payment have been established (declared by the General Meeting or otherwise). Pensions The Group’s obligations related to defined benefit plans are valued at the present value of accrued future pension benefits for the employees at the end of the reporting period. Pension plan assets are valued at their fair value. Accumulated effects of changes in estimates, changes in assumptions and deviations from actuarial assumptions (actuarial gains or losses) that are less than 10% of the higher of the pension benefit obligations and the pension plan assets at the beginning of the year are not recognised. When the accumulated effect is above 10%, the excess amount is recognised in the income state...
View Full Document

This document was uploaded on 03/21/2014.

Ask a homework question - tutors are online