Page 101 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
95
Notes to the Financial Statements
(Expressed in Renminbi unless otherwise indicated)
1 Significant Accounting Policies (Continued)
(v) Borrowing costs
Borrowing costs that are 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 capitalized as part of
the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.
The capitalization 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 activities that are necessary to prepare the
asset for its intended use or sale are in progress. Capitalization of borrowing costs is suspended or ceased when
substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted
or completed.
(w) Translation of foreign currencies
The primary functional currency of entities within the Group is Renminbi (“RMB”). The Group adopted RMB as its
presentation currency in the preparation of the annual financial statements, which is the currency of the primary
economic environment in which most of the Group’s entities operate.
Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the
transaction dates. Monetary assets and liabilities denominated in currencies other than the functional currency
are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are
recognized 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 overseas entities are translated into RMB at the exchange rates approximating the foreign
exchange rate ruling at the dates of transactions. Balance sheets items are translated into RMB at the exchange
rates ruling at the balance sheet date. The resulting exchange differences are recognized in other comprehensive
income and accumulated separately in equity in the exchange reserve. On disposal of an overseas entity, the
cumulative amount of the exchange differences relating to that particular foreign operation is reclassified from
equity to profit or loss when the profit or loss on disposal is recognized.
For the purpose of the consolidated cash flow statements, the cash flows of overseas entities within the Group
are translated into RMB by using the exchange rates approximating the foreign exchange rate ruling at the dates
of the cash flows.