Lenovo 2016 Annual Report Download - page 183

181
2015/16 Annual Report Lenovo Group Limited
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
(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.
Interest in leasehold land that is accounted for as an operating lease is presented as “prepaid lease payments”
in the consolidated balance sheet and is amortised over the lease terms on a straight line basis, ranging from
10 to 50 years for the Group.
(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.