Huawei 2013 Annual Report Download - page 72

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Notes to the Consolidated Financial Statements Summary
obligation at the beginning of the reporting
period to the defined benefit obligations.
The discount rate is the yield at the end
of the reporting period on high quality
corporate bonds that have maturity dates
approximating the terms of the Group’s
obligations.
Remeasurements arising from defined
benefit plans are recognised immediately
in other comprehensive income and
shall not be reclassified to profit or loss
in a subsequent period. However, the
remeasurement amounts recognised
in other comprehensive income may be
transferred within equity. Remeasurements
include actuarial gains and losses.
(q) Provisions and contingent liabilities
i) Provision for warranties
The Group provides warranty on its products
for a period typically covering 12 to 24
months. The Group estimates the costs
that may be incurred under its warranty
obligations and records a liability in the
amount of such costs when revenue is
recognised. Warranty costs generally include
parts, labour costs and service centre
support. Factors that affect the Group’s
warranty liability include the number of
installed units, historical and anticipated
rates of warranty claims. The Group
periodically reassesses its warranty liabilities
and adjusts the amounts as necessary.
ii) Provision for onerous contracts
A provision for onerous contracts is
recognised when the expected benefits to
be derived by the Group from a contract
are lower than the unavoidable cost of
meeting its obligations under the contract.
The provision is measured at the present
value of the lower of the expected cost of
terminating the contract and the expected
net cost of continuing with the contract.
Before a provision is established, the Group
recognises any impairment loss on the
assets associated with that contract.
iii) Other provisions and contingent liabilities
Provisions are recognised for other liabilities
of uncertain timing or amount when the
Group has a legal or constructive obligation
arising as a result of a past event, it is
probable that an outflow of economic
benefits will be required to settle the
obligation and a reliable estimate can be
made. Where the time value of money
is material, provisions are stated at the
present value of the expenditure expected
to settle the obligation.
Where it is not probable that an outflow
of economic benefits will be required, or
the amount cannot be estimated reliably,
the obligation is disclosed as a contingent
liability, unless the probability of outflow
of economic benefits is remote. Possible
obligations, whose existence will only
be confirmed by the occurrence or non-
occurrence of one or more future events are
also disclosed as contingent liabilities unless
the probability of outflow of economic
benefits is remote.