2020 Annual Report
2020 ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS
MEGACABLE.
(v)
Leases-
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
I. As a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration
in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the
Group has elected not to separate non-lease components and account for the lease and non-lease components as a single
lease component.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made on or
before the commencement date, plus initial direct costs incurred and an estimate of costs of dismantling and removing the
underlying asset or restoring the underlying asset or the site in which it is located, less the lease incentives received.
Subsequently, the right-of-use asset is depreciated using the straight-line method from the commencement date and until the
end of the lease term, unless the lease transfers ownership of the underlying asset to the Group at the end of the lease term or
that the cost of the right-of-use asset reflects that the Group is going to exercise a purchase option. In that case, the right-of-use
asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as that of property
and equipment. In addition, the right-of-use asset is periodically reduced for impairment losses, if any, and adjusted for certain
new measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that have not been paid on the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the
incremental rate for Group loans. In general, the Group uses its incremental loan rate as the discount rate.
The Group determines its incremental loan rate by obtaining interest rates from different external financing sources and
makes certain adjustments to reflect the lease terms and the type of asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
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fixed payments including fixed payments in substance
variable lease payments, which depend on an index or a rate, initially measured using the index or rate on the
commencement date
amounts the lessee expects to pay as residual value guarantees and
the exercise price of a call option that the Group is reasonably certain of exercising that option, the lease
payments in an optional renewal period if the Group is reasonably certain of exercising an extension option, and
the payments for penalties derived from early termination of the lease unless the Group is reasonably certain not
to terminate the lease early.
The lease liability is measured at amortized cost using the effective interest method. A new measurement is made when
there is a change in future lease payments as a result of a change in an index or rate, if there is a change in the Group's
estimate of the amount expected to be paid under a residual value guarantee, if the Group changes the assessment of
whether or not a purchase, extension or termination option will be exercised, or whether there is a fixed lease payment in
substance that has been modified.
When a new measurement of the lease liability is carried out in this manner, the corresponding adjustment is made to the
carrying amount of the right-of-use asset, or it is recorded in profit or loss if the carrying amount of the right-of-use asset has
been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment properties in property, plant and
equipment and lease liabilities in loans and obligations in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has chosen not to recognize right-of-use assets and lease liabilities for the leases of low-value assets and short-
term leases, including some information technology (IT) equipment. The Group recognizes the lease payments associated
with these leases as an expense on a straight-line basis throughout the term of the lease.
At the beginning or at the time of modification of a contract that contains a lease component, the Group distributes the
consideration in the contract to each lease component on the basis of their independent relative prices.
When the Group acts as lessor, it determines whether each lease is a financial or an operating lease at the beginning of the lease.
To classify each lease, the Group makes a general assessment of whether or not the lease transfers substantially all the risks
and rewards inherent to the ownership of the underlying asset. If this is the case, the lease is a financial lease; if not, it is an
operating lease.
As part of this evaluation, the Group considers certain indicators such as whether the lease covers most of the financial life of
the asset.
Fair value measurement
'Fair value' is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the
Group has access at that date. The fair value of a liability reflects its non-performance risk.
A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities.
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