104 Huawei Investment & Holding Co., Ltd.
- different taxable entities, which, in
each future period in which significant
amounts of deferred tax liabilities or
assets are expected to be settled or
recovered, intend to realise the current
tax assets and settle the current tax
liabilities on a net basis or realise and
settle simultaneously.
(p) Provisions and contingent liabilities
Provisions are recognised for liabilities of
uncertain timing or amount when the Group
has a legal or constructive obligation arising as
a result of a past event, it is probable that an
outflow of economic benefits will be required
to settle the obligation and a reliable estimate
can be made. Where the time value of money
is material, provisions are stated at the present
value of the expenditure expected to settle the
obligation.Where it is not probable that an outflow
of economic benefits will be required, or
the amount cannot be reliably estimated,
disclosure is made of the contingent liability,
unless the probability of outflow of economic
benefits is remote. Possible obligations,
whose existence will only be confirmed by the
occurrence or non-occurrence of one or more
future events are also disclosed as contingent
liabilities unless the probability of outflow of
economic benefits is remote.The main types of provisions are as follows:(i) Provision for warranties
The Group provides assurance warranty on its
standard consumer and enterprise products for
a period typically covering 12 to 24 months.The Group estimates the costs that may
be incurred under its assurance warranty
obligations and records a liability in the
amount of such costs when revenue is
recognised. Warranty costs generally include
spare parts, labour costs and service centre
support. Factors that affect the Group’s
warranty liability include the number of
sold units, historical and anticipated rates
of warranty claims. The Group periodically
reassesses its warranty liabilities and adjusts
the amounts as necessary.(ii) Provision for onerous contracts
A provision for onerous contracts is recognised
when the expected benefits to be derived by
the Group from a contract are lower than the
estimated cost of meeting its obligations under
the contract. The provision is measured at the
present value of the lower of the expected cost
of terminating the contract and the expected
net cost of continuing with the contract. Before
a provision is established, the Group recognises
any impairment loss on the assets associated
with that contract.(q) Revenue
Revenue is income arising from sales of
products, provision of services or use by others
of the Group’s properties under leases in the
ordinary course of the Group’s business.(i) Revenue from customer contracts
The Group divides its business into three
operating segments, Carrier Business,
Enterprise Business and Consumer Business.
The principal activities of each segment are
disclosed in note 7.The Group applies its revenue accounting
policies based on the features of the contracts
and the business practices of its business
groups.Revenue is measured based on the
consideration the Group expects to be entitled
to from the contract with the customer and
excludes those amounts collected on behalf
of third parties. The Group recognises revenue
when it transfers control over a product or
service (or bundle) to a customer.i. Contract combinations and modificationsThe Group combines separate customer
contracts with the same customer or
related parties of the same customers
entered into at or near the same time
when those contracts are negotiated as
a package to form a single commercial
objective, are significantly interdependent
in nature or contain significant pricing
dependencies.