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Asia Media Group Berhad
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Annual Report 2015
Notes to the Financial Statements
(continued)
pg.
85
3.
Summary of significant accounting policies (cont’d)
(m) Finance lease – the Group or the Company as lessee
Assets acquired by way of hire purchase or finance leases are stated at an amount equal
to the lower of their fair values and the present value of the minimum lease payments at
the inception of the leases, less accumulated depreciation and accumulated impairment
losses. The corresponding liability is included in the statement of financial position as finance
lease obligations. In calculating the present value of the minimum lease payments, the
discount factor used is the interest rate implicit in the lease, when it is practical to determine;
otherwise, the entity’s incremental borrowing rate is used. Any initial direct costs are also
added to the carrying amount of such assets.
Lease payments are apportioned between the finance charges and reduction of the lease
liability so as to achieve a constant rate of interest on the remaining balance of the liability
for each accounting period. Finance charges are charged to profit or loss.
Leased assets are depreciated over the estimated useful life of the asset. However, if there
is no reasonable certainty that the Group or the Company will obtain ownership by the end
of the lease term, the asset is depreciated over the shorter of the estimated useful life and
the lease term.
(n) Operating lease - the Group or the Company as lessee
Operating lease payments are recognised as an expense in profit or loss on the straight-
line basis over the lease term. The aggregate benefit of incentives provided by the lessor
is recognised as a reduction of rental expense over the lease term on the straight-line
basis.
Assets leased out under operating leases are presented on the statement of financial
position according to the nature of the assets. Rental income from operating leases is
recognised on the straight-line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognised on the straight-line basis over the lease term.
(o) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow
to the Group or the Company and the revenue can be reliably measured. Revenue is
measured at the fair value of consideration received or receivable, net of returns, allowances
and trade discounts.