Maxis Berhad | Annual Report 2013

Maxis Berhad | Annual Report 2013 98 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Finance leases and hire purchase agreements Leases and hire purchases of assets where the Group assumes substantially all benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the finance lease balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the statement of profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets acquired under finance leases or hire purchase agreements are depreciated or amortised over the shorter of the estimated useful life of the asset and the lease term. (s) Operating leases Leases of assets where a significant portion of risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statement of profit or loss on a straight line basis over the lease period. (t) Employee benefits (i) Short-term employee benefits Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the financial year in which the associated services are rendered by employees including full-time Executive Directors of the Group and of the Company. The Group and the Company recognise provision where contractually obliged or where there is a past practice that has created a constructive obligation. (ii) Termination benefits Termination benefits are payablewhenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts an offer of benefits in exchange for termination of employment. The Group and the Company recognise termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to the employee. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. (iii) Post-employment benefits Defined contribution plans A defined contribution plan is a pension plan under which the Group and the Company pay fixed contributions into a separate entity and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. The Group’s and the Company’s contributions to defined contribution plans are charged to the statement of profit or loss in the period to which they relate. Once the contributions have been paid, the Group and the Company have no further payment obligations. NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2013 Continued