China Communications Services Corporation Limited Annual Report 2015
169
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
46. POSSIBLE IMPACT OF AMENDMENTS TO STANDARDS, NEW STANDARDS AND
INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL
ACCOUNTING YEAR ENDED 31 DECEMBER 2015
(continued)
IFRS 15 Revenue from Contracts with Customers
In May 2014, IFRS15 was issued which establishes a single comprehensive model for entities to use in accounting for
revenue arising from contracts with customers; IFRS 15 will supersede the current revenue recognition guidance including
IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective.
The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. Specially, the Standard introduces a 5-step approach to revenue recognition.
— Step 1: Identify the contract(s) with a customer
— Step 2: Identify the performance obligations in the contract
— Step 3: Determine the transaction price
— Step 4: Allocate the transaction price to the performance obligations in the contract
— Step 5: Recognise revenue when (or as)the entity satisfies a performance obligation
Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e, when ’control’ of the
goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive
guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS
15.
The directors of the Company anticipate that the application of IFRS 15 in the future may have a material impact on the
amounts reported and disclosures made in the Group’s consolidated financial statements. However, it is not practicable to
provide a reasonable estimate of the effect of IFRS 15 until the Group performs a detailed review.
IFRS 16 Leases
IFRS 16, which upon the effective date will supersede IAS 17 Leases, introduces a single lessee accounting model and
requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying
asset is of low value. Specifically, under IFRS 16, a lessee is required to recognise a right-of-use asset representing its right
to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a
lessee should recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash
repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash
flows. Also, the right-of-use asset and the lease liability are initially measured on a present value basis. The measurement
includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is
reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This
accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases
under the predecessor standard, IAS 17.
