Huawei 2013 Annual Report Download - page 71

70 Notes to the Consolidated Financial Statements Summary
When these assets are derecognised or
impaired (see note 1(l)), the cumulative
gain or loss is reclassified from equity to
profit or loss.
■ Interest-bearing loans and borrowings
Interest-bearing loans and borrowings
are recognised initially at fair value
less attributable transaction costs.
Subsequent to initial recognition,
interest-bearing loans and borrowings
are stated at amortised cost with any
difference between the amount initially
recognised and redemption value being
recognised in profit or loss over the
period of the loans and borrowings,
together with any interest and fees
payable, using the effective interest
method.
■ Other financial liabilities
Trade and other payables are
initially recognised at fair value and
subsequently stated at amortised cost
unless the effect of discounting would
be immaterial, in which case they are
stated at cost.
(p) Employee benefits
i) Short term employee benefits and contributions
to defined contribution retirement plans
Salaries, annual bonuses, paid annual leave
and contributions to defined contribution
retirement plans are accrued in the year
in which the associated services are
rendered by employees. Where payment or
settlement is deferred and the effect would
be material, these amounts are stated at
their present values.
ii) Defined benefit obligations
The Group’s obligation in respect of defined
benefit plans is calculated separately for
each plan by estimating the amount of
future benefit that employees have earned
in return for their service in the current and
prior periods; that benefit is discounted to
determine the present value. The calculation
is performed by management using the
projected unit credit method.
Service cost and interest cost on the
defined benefit obligations are recognised
in profit or loss. Service cost is allocated
by function as part of “cost of sales”,
“research and development expenses”,
“selling and administrative expenses”.
Current service cost is measured as the
increase in the present value of the
defined benefit obligations resulting from
employee service in the current period.
When the benefits of a plan are changed,
or when a plan is curtailed, the portion
of the changed benefit related to past
service by employees, or the gain or loss on
curtailment, is recognised as an expense in
profit or loss at the earlier of when the plan
amendment or curtailment occurs and when
related restructuring costs or termination
benefits are recognised. Interest cost on
defined benefit obligations for the period
is determined by applying the discount
rate used to measure the defined benefit