Notes to the Financial Statements - SingTel

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Notes to the Financial StatementsFor the financial year ended 31 March 20112.25 Government GrantsGrants in recognition of specific expenses are recognised in the income statement over the periods necessary to matchthem with the relevant expenses they are intended to compensate. Grants related to depreciable assets are deferred andrecognised in the income statement over the period in which such assets are depreciated and used in the projects subsidised bythe grants.2.26 Exceptional ItemsExceptional items refer to items of income or expense within the income statement from ordinary activities that are of such size,nature or incidence that their separate disclosure is considered necessary to explain the performance for the financial year.2.27 Deferred TaxationDeferred taxation is provided in full, using the liability method, on all temporary differences at the end of the reporting periodbetween the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferredincome tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at thetime of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is alsonot recognised for goodwill which is not deductible for tax purposes. The amount of deferred tax provided is based on theexpected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates (and laws) enactedor substantively enacted in countries where the Company and subsidiaries operate by, at the end of the reporting period.Deferred tax liabilities are provided on all taxable temporary differences arising on investments in subsidiaries, associated andjoint venture companies, except where the timing of the reversal of the temporary difference can be controlled and it is probablethat the temporary difference will not reverse in the foreseeable future.Deferred tax assets are recognised for all deductible temporary differences and carry forward of unutilised tax losses, to theextent that it is probable that future taxable profit will be available against which the deductible temporary differences and carryforward of unused losses can be utilised.At the end of each reporting period, the Group re-assesses unrecognised deferred tax assets and the carrying amount ofdeferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it is probable thatfuture taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount ofa deferred tax asset to the extent that it is no longer probable that sufficient future taxable profit will be available to allow thebenefit of all or part of the deferred tax asset to be utilised.Current and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in thesame or different period, directly to equity.2.28 DividendsInterim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in thefinancial year in which the dividends are approved by the shareholders.116 SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES
Notes to the Financial StatementsFor the financial year ended 31 March 20112.29 Segment ReportingOperating segment is identified as the component of the Group that is regularly reviewed by the chief operating decision makerin order to allocate resources to the segment and to assess its performance.2.30 Non-current Assets (or Disposal Groups) Held for Sale and Discontinued OperationsNon-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount andfair value less costs to sell if their carrying amounts are recovered principally through sale transactions rather than throughcontinuing use.3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSFRS 1, Presentation Of Financial Statements, requires disclosure of the judgements management has made in the process ofapplying the accounting policies that have the most impact on the amounts recognised in the financial statements. It alsorequires disclosure about the key assumptions concerning the future, and other key sources of estimation uncertainty at theend of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets andliabilities within the next financial year. The estimates and assumptions are based on historical experience and other factorsthat are considered relevant. Actual results may differ from these estimates.The following presents a summary of the critical accounting estimates and judgments -3.1 Impairment ReviewsThe accounting policies for impairment of non-financial assets are stated in Note 2.16.During an impairment review, the Group assesses whether the carrying amount of an asset or cash-generating unit exceeds itsrecoverable amount. Recoverable amount is defined as the higher of an asset’s or cash generating unit’s fair value less costs tosell and its value-in-use. In making this judgement, the Group evaluates the value-in-use which is supported by the net presentvalue of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriaterate.Forecasts of future cash flows are based on the Group’s estimates using historical, sector and industry trends, general marketand economic conditions, changes in technology and other available information.The assumptions used by management to determine the value-in-use calculations of goodwill on acquisition of subsidiaries,and carrying values of associated and joint venture companies are stated in Note 23.3.2 Impairment of Trade ReceivablesThe Group assesses at the end of each reporting period whether there is objective evidence that trade receivables have beenimpaired. Impairment loss is calculated based on a review of the current status of existing receivables and historical collectionsexperience. Such provisions are adjusted periodically to reflect the actual and anticipated experience.ANNUAL REPORT 2010/2011 117
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Notes to the Financial Statements - SingTel

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