Lenovo 2013 Annual Report Download - page 134

NOTES TO THE FINANCIAL STATEMENTS
Lenovo Group Limited 2012/13 Annual Report
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2 Significant accounting policies (continued)
(y) Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will
be received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognized as ‘other operating income – net’ in the consolidated
income statement over the period necessary to match them with the costs that they are intended to compensate.
Government grants relating to property, plant and equipment are included in non-current liabilities as deferred
government grants and are credited to the consolidated income statement on a straight-line basis over the expected
lives of the related assets.
(z) Operating leases (as the lessee)
Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are
accounted for as operating leases. Payments made under operating leases (net of any incentives received from the
lessor) are charged to the income statement on a straight-line basis over the lease term.
(aa) Related party transactions
A related party transaction is a transfer of resources, services or obligations between the Group and a related party of
the Group, regardless of whether a price is charged.
(i) A person, or a close member of that person’s family, is related to the Group if that person:
– has control or joint control over the Group;
– has significant influence over the Group; or
– is a member of the key management personnel of the Group or the Group’s parent.
(ii) An entity is related to the Group if any of the following conditions applies:
– The entity and the Group are members of the same group (which means that each parent, subsidiary and
fellow subsidiary is related to the others).
– One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of
a group of which the other entity is a member).
– Both entities are joint ventures of the same third party.
– One entity is a joint venture of a third entity and the other entity is an associate of the third party.
– The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity
related to the Group.
– The entity is controlled or jointly controlled by a person identified in (i) above.
– A person, or a close member of that person’s family, who has control or joint control over the Group, has
significant influence over the entity or is a member of the key management personnel of the entity (or of a
parent of the entity).
(ab) Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s and Company’s financial
statements in the period in which the dividends are approved by the Company’s shareholders in case of final dividend
and by the Company’s directors in case of interim dividend.