Financial Statements - Entel

EMPRESA NACIONAL DE TELECOMUNICACIONES S.A. & SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)For Translation Purposes Only– Prepaid of Mobile Services: Revenue received from prepaid mobile customers is recorded underincome in the month in which the users make use of the services for which the payment is destinedor in which the charge expires, whichever occurs earlier.– Services Spanning Multiple Accounting Periods: The provision of services for activities spanningmore than one accounting period is recorded using the percentage method at the end of the period.This value is determined in line with the percentage of consumables supplied with respect to thebudget.n) Financing CostsThe initial costs for commissioning, consultancy, and taxes for contracting credit are processedusing the amortized cost method. Using this method, these costs form part of the effective interestrate and amortization is consequently determined based on this rate.o) ProvisionsLiabilities are recognized for all legal obligations to third parties, derivative transactions or futureevents with a high probability of generating payment flows.These provisions are recorded insofar as their values can be determined in line with the risksidentified and based upon best estimates. Their value is discounted where the effect of the timevalue of money is deemed to be significant.p) DividendsDividends to be paid to third parties are reported as a change in net equity for the period theobligation for their distribution arises, either because they are declared at the shareholders meetingor because they correspond to a legal obligation for minimum dividend payments.q) Segment Financial InformationAn operating segment is a component of the Group that conducts business activities for which itmay receive ordinary revenue and incur costs, including revenue and costs for transactions withany other realted companies. All income from operating segments is periodically reviewed byGroup executive management to determine the resources to be assigned to the segment andevaluate its performance.Income recorded for segments includes elements directly attributable to the segment and thosewhich can be reasonably assigned to it.Capital expenditure for a segment is the total expenditure incurred during each period for theacquisition of property, plant and equipment, and intangible assets.r) State SubsidiesState subsidies for financing investments are recorded at the lowest cost of the purchase orconstruction of the associated assets.s) Revenue and Termination Costs–13–