Telstra 2011 Annual Report Download - page 136

Telstra Corporation Limited and controlled entities
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Notes to the Financial Statements (continued)
(a) Trade receivables and allowance for doubtful debts
(continued)
Our policy requires customers to pay us in accordance with agreed
payment terms. Depending on the customer segment, our
settlement terms are generally 14 to 30 days from date of invoice.
All credit and recovery risk associated with trade receivables has
been provided for in the statement of financial position.
Our trade receivables include our customer deferred debt and
White Pages® directory charges. Our customer deferred debt
allows eligible customers the opportunity to repay the cost of their
mobile handset, other hardware and approved accessories monthly
over 12, 18 or 24 months. The loan is provided interest free to our
mobile postpaid customers. Similarly, the White Pages® directory
entries can be repaid over 12 months.
Trade receivables have been aged according to their original due
date in the above ageing analysis, including where repayment
terms for certain long outstanding trade receivables have been
renegotiated.
We hold security for a number of trade receivables, including past
due or impaired receivables in the form of guarantees, deeds of
undertaking, letters of credit and deposits. During fiscal 2011, the
securities we called upon were insignificant.
We have used the following basis to assess the allowance loss for
trade receivables:
• a statistical approach to apply risk segmentation to the debt,
and applying the historical impairment rate to each segment at
the end of the reporting period;
• an individual account by account assessment based on past
credit history; and
• any prior knowledge of debtor insolvency or other credit risk.
As at 30 June 2011, trade receivables with a carrying amount of
$1,305 million (2010: $1,313 million) for the Telstra Group were
past due but not impaired.
These trade receivables, along with our trade receivables that are
neither past due nor impaired, comprise customers who have a
good debt history and are considered recoverable.
(b) Finance lease receivable
We enter into finance leasing arrangements predominantly for
communication assets dedicated to solutions management and
outsourcing services that we provide to our customers. The
average term of finance leases entered into is between 2 to 5 years
(2010: 2 to 5 years).
The interest rate inherent in the leases is fixed at the contract date
for the entire lease term. The average effective interest rate
contracted is 7.5% (2010: 7.0%) per annum.
10. Trade and other receivables (continued)
Telstra Group
As at 30 June
2011 2010
$m $m
Amounts receivable under
finance leases
Within 1 year . . . . . . . . . . . . 59 72
Within 1 to 5 years . . . . . . . . . 99 88
After 5 years . . . . . . . . . . . . 12
Total minimum lease payments . . . . 159 162
Less unearned finance income . . . . (15) (14)
Present value of minimum lease payments 144 148
Included in the financial
statements as:
Current finance lease receivables . . . 52 65
Non current finance lease receivables . 92 83
144 148