Maxis Berhad | Annual Report 2012

Maxis Berhad // Annual Report 2012 120 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (w) Contingent liabilities (continued) Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of MFRS 137 and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with MFRS 118. (x) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers comprising the Chief Executive Officer, Chief Financial Officer and Joint Chief Operating Officers. The chief operating decision-makers are responsible for allocating resources, assessing performance of the operating segments and making strategic decisions. Segment revenues and expenses are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenues and expenses are determined before intragroup balances and transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group companies within a single segment. 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group and the Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact on the Group’s and the Company’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. (a) Intangible assets The telecommunications licences with allocated spectrum rights are not subject to amortisation and are tested annually for impairment as the Directors are of the opinion that the licences can be renewed in perpetuity at negligible cost and the associated spectrum rights, similar to land, have an indefinite economic useful life. Correspondingly, deferred tax has not been recognised. The estimated economic useful life reflects the Group’s expectation of the period over which the Group will continue to recover benefits from the licence. The economic useful life is periodically reviewed, taking into consideration such factors as changes in technology and regulatory environment. See Note 16 to the financial statements for the key assumptions on the impairment assessment of intangible assets. (b) Estimated useful lives and impairment assessment of property, plant and equipment The Group reviews annually the estimated useful lives and assesses for indicators of impairment of property, plant and equipment based on factors such as business plans and strategies, historical sector and industry trends, general market and economic conditions, expected level of usage, future technological developments and other available information. It is possible that future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A detailed impairment assessment was carried out for Enterprise Fixed services and Home services segments during the financial year. Any impairment or reduction in the estimated useful lives of property, plant and equipment would increase charges to the income statements and decrease their carrying value. See Note 15 to the financial statements for the impact on the changes in the estimated useful lives of property, plant and equipment. NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2012 Continued