Annual Report 2011 - T-Hrvatski Telekom

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k) Leases
Leases in which 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 (net of any incentives received
from the lessor) are charged to the statement of
comprehensive income on a straight-line basis over
the period of the lease.
Leases of property, plant and equipment where the
Group has substantially all the risks and rewards of
ownership are classified as finance lease. Finance
leases are capitalised at the lease’s commencement
at the lower of the fair value of the leased property
and the present value of the minimum lease
payments. Each lease payment is allocated between
the liability and finance charge. The corresponding
rental obligations, net of finance charges, are
included in borrowings. The interest element of
the finance cost is charged to the statement of
comprehensive income over the lease period so as
to produce constant periodic rate of interest on the
remaining balance of the liability for each period.
The property, plant and equipment acquired under
finance lease is depreciated over the shorter of the
useful life of the assets and the lease term.
l) Taxation
The income tax charge is based on profit for the
year and includes deferred taxes. Deferred taxes are
calculated using the liability method.
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax
purposes at the reporting date.
Deferred tax is determined using income tax rates that
have been enacted or substantially enacted by the
financial statement date and are expected to apply
when the related deferred tax asset is realized or the
deferred tax liability is settled.
expects, at the reporting date, to recover or settle the
carrying amount of its assets and liabilities.
Deferred tax assets are recognized to the extent that
it is probable that future taxable profit (or reversing
deferred tax liabilities) will be available against which
the temporary differences can be utilized.
Deferred tax assets and liabilities are not discounted
and are classified as non-current assets and liabilities
in the statement of financial position. Deferred
tax assets are recognized when it is probable that
sufficient taxable profits will be available against
which the deferred tax assets can be utilised.
Current tax and deferred tax are charged or credited
in other comprehensive income if the tax relates to
items that are credited or charged, in the same or a
different period in other comprehensive income.
m) Employee benefit obligations
The Group provides other long-term employee
benefits (see Note 19). These benefits include
retirement and jubilee (length of service) payments,
and are determined using a projected unit credit
method. The projected unit credit method considers
each period of service as giving rise to an additional
unit of benefit entitlement and measures each unit
separately to build up the final obligation.
Past service costs are recognized in other
comprehensive income immediately in the period in
which they occur. Gains or losses on the curtailment
or settlement of benefit plans are recognized when
the curtailment or settlement occurs. The benefit
obligation is measured at the present value of
estimated future cash flows using a discount rate that
is similar to the interest rate on government bonds
where the currency and terms of the government
bonds are consistent with the currency and estimated
terms of the benefit obligation. Gains and losses
resulting from changes in actuarial assumptions are
recognized in other comprehensive income in the
period in which they occur.
Consolidated financial statements
The measurement of deferred tax liabilities and
deferred tax assets reflects the tax consequences that
would arise from the manner in which the enterprise
The Group provides death in service short term
benefits which are recognized as an expense of the
period in which it incurred.