Page 97 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
91
Notes to the Financial Statements
(Expressed in Renminbi unless otherwise indicated)
1 Significant Accounting Policies (Continued)
(n) Deferred revenue (Continued)
Revenue deferred for unredeemed point rewards are recognized when such rewards are redeemed or has
expired.
Deferred tax credit on purchase of domestic telecommunications equipment is amortized over the remaining lives
of the related equipment as a reduction to income tax expense.
(o) Interest-bearing borrowings
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the
amount initially recognized and redemption value being recognized in profit or loss over the period of the
borrowings, together with any interest and fees payable, using the effective interest method.
(p) Accounts payable and other payables
Accounts payable and other payables are initially recognized at fair value and subsequently stated at amortized
cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
(q) Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and in hand, demand deposits with banks, and short-term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three months of maturity at acquisition.
(r) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the
economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably,
revenue is recognized in profit or loss as follows:
(i) revenue derived from voice and data services are recognized when the service is rendered;
(ii) revenue from prepaid services is recognized when the mobile telecommunications services are delivered
based upon actual usage by customers;
(iii) sales of SIM cards and terminals are recognized on delivery of goods to the buyer and such amount, net of
cost of goods sold, is included in other net income due to its insignificance;
(iv) interest income is recognized as it accrues using the effective interest method; and
(v) revenue from a fixed price contract is recognized using the percentage of completion method.