Huawei 2014 Annual Report Download - page 78

76 Huawei Investment & Holding Co., Ltd. 2014 Annual Report
lease payments receivable. Contingent rentals are
recognised as income in the accounting period in
which they are earned.
(t) Government grants
Government grants are recognised in the
consolidated statement of financial position only
when there is reasonable assurance that they will
be received and that the Group will comply with
the conditions attaching to them. Grants that
compensate the Group for expenses incurred
are recognised as other income in profit or
loss on a systematic basis in the same periods
in which the expenses are incurred. Grants
that compensate the Group for the cost of an
asset are recognised as deferred income and
consequently are effectively recognised in profit
or loss on a systematic basis over the useful life
of the asset.
(u) Finance income and expenses
Finance income comprises dividend and
interest income on funds invested (including
available-for-sale financial assets), gains on
the disposal of available-for-sale and held-
for-trading financial assets, and changes in the
fair value of held-for-trading financial assets.
Interest income is recognised as it accrues using
the effective interest method. Dividend income
from unlisted investments is recognised when
the equity holder's right to receive payment
is established; dividend income from listed
investments is recognised when the share price
of the investment goes ex-dividend.
Finance expenses comprise interest expense
on borrowings, unwinding of the discount on
provisions and impairment losses recognised
on available-for-sale financial assets. Borrowing
costs that are directly attributable to the
acquisition, construction or production of an
asset which necessarily takes a substantial period
of time to get ready for its intended use or
sale are capitalised as part of the cost of that
asset. Other borrowing costs are expensed in the
period in which they are incurred.
The capitalisation of borrowing costs as part
of the cost of a qualifying asset commences
when expenditure for the asset is being
incurred, borrowing costs are being incurred
and activities that are necessary to prepare
the asset for its intended use or sale are in
progress. Capitalisation of borrowing costs is
suspended or ceases when substantially all the
activities necessary to prepare the qualifying
asset for its intended use or sale are interrupted
or completed.
Foreign exchange gains and losses are included
under finance income or expenses on a net basis.
(v) Segment reporting
Operating segments, and the amounts of
each segment item reported in the financial
statements, are identified from the financial
information provided regularly to the Group's
most senior executive management for the
purposes of allocating resources to, and assessing
the performance of, the Group's various lines of
business and geographical locations.
Individually material operating segments are
not aggregated for financial reporting purposes
unless the segments have similar economic
characteristics and are similar in respect of the
nature of products and services, the nature
of production processes, the type or class of
customers, the methods used to distribute
the products or provide the services, and the
nature of the regulatory environment. Operating
segments which are not individually material may
be aggregated if they share a majority of these
criteria.