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2.
Summary of significant accounting policies (cont’d.)
2.16 Cash and cash equivalents
For the purpose of the statements of cash flow, cash and cash equivalents comprise cash on hand, bank balances, demand
deposits and other short term, highly liquid investments with original maturities of three months or less, less bank overdrafts.
Deposits held as pledged securities for term loans granted are not included as cash and cash equivalents.
2.17 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.
Provisions are not recognised for future operating losses.
2.18 Share capital
2.18.1 Classification
Ordinary shares with discretionary dividends are classified as equity.
2.18.2 Share issue costs
Incremental external costs directly attributable to the issuance of new shares or options are deducted against share
premium account.
2.18.3 Dividends distribution
Distributions to holders of an equity instrument is debited directly to equity, net of any related income tax benefit and
the corresponding liability is recognised in the period in which the dividends are approved.
2.19 Treasury shares
When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration
paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from
total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When
treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised
in equity.
2.20Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between initial recognised amount and the redemption value is recognised in profit or loss over
the period of the borrowings using the effective interest method.
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
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AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS
264