China Communications Services Corporation Limited Annual Report 2015
105
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
2. SIGNIFICANT ACCOUNTING POLICIES
(continued)
(b) Basis of preparation of the financial statements
The consolidated financial statements for the year ended 31 December 2015 comprise the Group and its interests in
associates.
The measurement basis used in the preparation of the consolidated financial statements is the historical cost basis
except that the following assets and liabilities:
— Financial derivatives and available-for-sale financial assets listed in active market are measured at fair value.
— Liabilities for cash-settled share-based payment arrangements are measured at fair value.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined on such a basis, except for share-based payment
transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope
of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value, such as net
realizable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date;
•
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
•
Level 3 inputs are unobservable inputs for the asset or liability.
The preparation of financial statements in accordance with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis
of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRSs that have significant effect on the financial statements
and major sources of estimation uncertainty are discussed in note 41.
