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2.
Summary of significant accounting policies (cont’d.)
2.25Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
2.26Contingent assets and liabilities
The Group does not recognise contingent assets and liabilities other than those arising from business combinations, but
discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events
whose existence will be confirmed by occurrence or non-occurrence of one or more uncertain future events beyond the control
of the Group or a present obligation that is not recognised because it is not probable that an outflowof resources will be required
to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be
recognised because it cannot be measured reliably. However, contingent liabilities do not include financial guarantee contracts.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-
occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent
assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business
combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting
effect will be reflected in the goodwill arising from the acquisitions.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date
of acquisition at the higher of the amount that would be recognised in accordance with the provisions of MFRS 137 ‘Provisions,
Contingent Liabilities and Contingent Assets’ and the amount initially recognised less, when appropriate, cumulative
amortisation recognised in accordance with MFRS 118 ‘Revenue’.
2.27 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Group Chief Executive Officer that makes strategic decisions.
2.28Maintenance reserve
Maintenance reserve relates to payments made by the lessee for maintenance activities undertaken during the lease period.
The Group will reimburse the lessee for agreed maintenance work done as and when incurred. The Group records the amounts
received as maintenance reserve. At the expiry of the lease term, excess maintenance reserve is recognised in the profit and
loss account.
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AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS