Unformatted text preview: ment over the expected average remaining
service period of the participating employees. The net pension cost
for the period is presented as salaries and personnel costs. Changes in the pension obligations due to changes in pension
plans are recognised over the expected remaining service period
when the changes are not immediately vested. Gains or losses
on the curtailment or settlement of a defined benefit plan are
recognised through the income statement when the curtailment
or settlement occurs. A curtailment occurs when the Group either
is demonstrably committed to make a material reduction in the
number of employees covered by a plan or amends the terms of a
defined benefit plan such that a material element of future service
by current employees will no longer qualify for benefits or will
qualify only for reduced benefits. The effect of curtailment or/and
settlement is presented as a part of ‘other income and expenses’
in the income statement.
Payments to defined contribution plans are expensed as incurred.
When sufficient information is not available to use defined benefit
accounting for a multi-employer plan that is a defined benefit plan,
the plan is accounted for as if it were a defined contribution plan.
The Group may enter into arrangements that do not take the
legal form of a lease but convey a right to use assets in return for
payments. Determining whether the arrangements are, or contain,
leases is based on the substance of the arrangements and requires
an assessment of whether: (a) fulfilment of the arrangements is
dependent on the use of a specific asset or assets; and (b) the
arrangements convey a right to use the assets. Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards incidental to
ownership to the lessee. All other leases are classified as operating
leases. The assessment for the classification of leases is based on
the substance of the transactions. /page 29/
telenor annual report 2011
notes to the financial statements / telenor group The Group as lessor
Receivables on assets leased to others under finance leases are
presented at an amount equal to the net investment in the leases.
The finance income is allocated using a constant periodic rate
of return on the net investment over the lease term. Direct costs
incurred that are directly attributable to negotiating and arranging
the leases, are included in the receivables. Lease income from operating leases is recognised on a straightline basis over the lease terms. Incentives provided to the lessees
are aggregated and recognised as a reduction of income on a
straight-line basis over the lease terms. Initial direct costs incurred
in negotiating and arranging an operating lease are included in
the carrying amounts of the leased assets and recognised as
an expense over the lease term on the same basis as the lease.
Contingent rents are recognised as revenue in the period in which
they are earned.
The Group as lessee
Assets held under finance leases are recognised as assets of the
Group at their fair value at the inception of the leases or, if lower,
at the present value of the minimum lease payments. The liabilities
to the lessor are recognised as finance lease obligations in the
statement of financial position. Lease payments are apportioned
between finance expenses and reduction of the lease liability
to achieve a constant periodic rate of interest on the remaining
balance of the liability. Lease payments under operating leases are recognised in the
income statement on a straight-line basis over the lease terms.
Incentives received on negotiating or renewing the operating leases
are also amortised on a straight-line basis over the lease terms.
Prepaid lease payments made on entering into operating leases or
acquiring leaseholds are recognised in the statement of financial
position and amortised on a straight line basis over the lease term.
A financial instrument is defined as any contract that gives rise
to a financial asset of one entity and a financial liability or equity
instrument of another entity. The Group has classified financial
assets and liabilities into the following classes: trade receivables and
other current and non-current financial assets, equity securities,
cash and cash equivalents, trade payables and other noninterest bearing financial liabilities, interest-bearing liabilities and
derivatives. The categorisation of the financial instrument for measurement
purposes is done based on the nature and purpose of the financial
instrument and is determined at the initial recognition. The Group
does not apply the fair value option.
The Group has financial assets classified in the following categories:
at fair value through profit or loss, loans and receivables and
available-for-sale. Financial assets at fair value through profit or
loss consist of assets held for trading and include derivatives. Loans
and receivables consist of unquoted non-derivative assets with
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- Spring '14