China Communications Services Corporation Limited Annual Report 2015
119
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
2. SIGNIFICANT ACCOUNTING POLICIES
(continued)
(x) Government grants
Government grants are recognised in the consolidated statement of financial position initially when there is
reasonable assurance that they will be received and that the Group will comply with the conditions attaching to
them. Grants that compensate the Group for expenses incurred are recognised as income in profit or loss on a
systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the
cost of an asset are recognised in profit or loss over the useful life of the asset by way of reduced depreciation
expenses.
(y) Translation of foreign currencies
The functional currency of the Company and the presentation currency of the Group is Renminbi (“RMB”). Foreign
currency transactions during the year are translated into RMB at the applicable rates of exchange quoted by the
People’s Bank of China (“PBOC”) prevailing on the transaction dates. Monetary assets and liabilities denominated in
foreign currencies are translated into RMB at the applicable rates ruling at the end of the reporting period. Foreign
currency differences, other than those capitalised as construction in progress (see note 2(h)), are recognised in profit
or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling
at the dates the fair value was determined.
The results of foreign operations are translated into RMB at the exchange rates approximating the foreign exchange
rates ruling at the dates of the transactions. Assets and liabilities of foreign operations are translated into RMB at the
foreign exchange rates ruling at the end of the reporting period. The resulting exchange differences are recognised in
other comprehensive income and accumulated separately in equity in the exchange reserve. On disposal of a foreign
operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassify from
equity to profit or loss when the profit or loss on disposal is recognised.
(z) Borrowing costs
Borrowing costs that directly attributable to the acquisition, construction or production of an asset which necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that
asset. Other borrowing costs are expensed in the period in which they are incurred.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the
asset is being incurred, borrowing costs are being incurred and development activities that are necessary to prepare
the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when
substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or
complete.
