2012 Annual Report - ZTE

ANNUAL REPORT 2012Notes to Financial Statements(Prepared under Hong Kong Financial Reporting Standards)31 December 20122.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS (continued)The HKAS 32 Amendments clarify the meaning of “currently has a legally enforceable right to set off” foroffsetting financial assets and financial liabilities. The amendments also clarify the application of the offsettingcriteria in HKAS 32 to settlement systems (such as central clearing house systems) which apply grosssettlement mechanisms that are not simultaneous. The amendments are not expected to have any impacton the financial position or performance of the Group upon adoption on 1 January 2014.The Annual Improvements to HKFRSs 2009–2011 Cycle issued in June 2012 sets out amendments to anumber of HKFRSs. The Group expects to adopt the amendments from 1 January 2013. There are separatetransitional provisions for each standard. While the adoption of some of the amendments may result inchanges in accounting policies, none of these amendments are expected to have a significant financialimpact on the Group. Those amendments that are expected to have a significant impact on the Group’spolicies are as follows:(a)HKAS 1 Presentation of Financial Statements: Clarifies the difference between voluntary additionalcomparative information and the minimum required comparative information. Generally, the minimumrequired comparative period is the previous period. An entity must include comparative information inthe related notes to the financial statements when it voluntarily provides comparative information beyondthe previous period. The additional comparative information does not need to contain a complete setof financial statements.In addition, the amendment clarifies that the opening statement of financial position as at the beginningof the preceding period must be presented when an entity changes its accounting policies; makesretrospective restatements or makes reclassifications, and that change has a material effect on thestatement of financial position. However, the related notes to the opening statement of financial positionas at the beginning of the preceding period are not required to be presented.(b)HKAS 32 Financial Instruments: Presentation: Clarifies that income taxes arising from distributions toequity holders are accounted for in accordance with HKAS 12 Income Taxes. The amendment removesexisting income tax requirements from HKAS 32 and requires entities to apply the requirements inHKAS 12 to any income tax arising from distributions to equity holders.2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESSubsidiariesA subsidiary is an entity whose financial and operating policies the company controls, directly or indirectly,so as to obtain benefits from its activities.The results of subsidiaries are included in the Company’s income statement to the extent of dividendsreceived and receivable. The Company’s investments in subsidiaries are stated at cost less any impairmentlosses.329