Lenovo 2014 Annual Report Download - page 146

144 Lenovo Group Limited 2013/14 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
(x) Employee benefits (continued)
(iii) Long-term incentive program (continued)
At each balance sheet date, the Group revises its estimates of the number of Long-term Incentive Awards that are
expected to become exercisable. It recognizes the impact of the revision of original estimates, if any, in the income
statement, with a corresponding adjustment to share-based compensation reserve under equity.
Employee share trusts are established for the purposes of awarding shares to eligible employees under the long-
term incentive program. The employee share trusts are administered by independent trustees and are funded by
the Group’s cash contributions and recorded as contributions to employee share trusts, an equity component. The
administrator of the employee share trusts buys the Company’s shares in the open market for award to employees
upon vesting.
Upon vesting, the corresponding amounts in the share-based compensation reserve will be transferred to share
capital for new allotment of shares to employees, or to the employee share trusts for shares awarded to employees
by the employee share trusts.
(iv) Share options
In accordance with the transitional provision of HKFRS 2, share options granted after November 7, 2002 and
unvested on April 1, 2005 were expensed retrospectively in the income statement of the respective periods. At April 1,
2005, the Group had no option granted after November 7, 2002 that had not yet vested on that day. The proceeds
received net of any directly attributable transaction costs are credited to share capital when the options are exercised.
(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).