Together good things happen - Airtel

SCHEDULE: 21
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES TO
THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
MARCH 31, 2010
1 BASIS OF PREPARATION
The financial statements have been prepared to comply in
all material respects with the Notified accounting
standards by Companies (Accounting Standards) Rules,
2006, (‘as amended’) and the relevant provisions of the
Companies Act, 1956. The financial statements have been
prepared under the historical cost convention on an
accrual basis except in case of assets for which revaluation
is carried out. The accounting policies have been
consistently applied by the Company and are consistent
with those used in the previous year.
2. USE OF ESTIMATES
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the
financial statements and the results of operations during
the reporting year end. Although these estimates are
based upon management’s best knowledge of current
events and actions, actual results could differ from
these estimates.
3. FIXED ASSETS
Fixed Assets are stated at cost of acquisition and
subsequent improvements thereto, including taxes &
duties (net of cenvat credit), freight and other incidental
expenses related to acquisition and installation. Capital
work-in-progress is stated at cost.
Site restoration cost obligations are capitalized when 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.
The intangible component of license fee payable by the
Company for cellular and basic circles, upon migration to
the National Telecom Policy (NTP 1999), i.e. Entry Fee, has
been capitalised as an asset and the one time license fee
paid by the Company for acquiring new licences (post
NTP-99) (basic, cellular, national long distance and
international long distance services) has been capitalised
as an intangible asset.
4. DEPRECIATION / AMORTISATION
Depreciation on fixed assets is provided on the straight
line method based on useful lives of respective assets as
estimated by the management or at the rates prescribed
under Schedule XIV of the Companies Act, 1956,
whichever is higher. Leasehold land is amortised over the
period of lease. Depreciation rates adopted by the
Company are as follows:
Useful lives
Leasehold Land Period of lease
Building 20 years
Building on Leased Land 20 years
Leasehold Improvements Period of lease or 10 years
whichever is less
Plant & Machinery 3 years to 20 years
Computer & Software 3 years
Office Equipment 2 years/5 years
Furniture and Fixtures 5 years
Vehicles 5 years
Software up to Rs 500 thousand is fully depreciated in the
financial year placed in service.
Bandwidth capacity is amortised on straight line basis
over the period of the agreement subject to a maximum of
18 years.
The Entry Fee capitalised is amortised over the period of
the license and the one time licence fee is amortised over
the balance period of licence from the date of
commencement of commercial operations.
The site restoration cost obligation capitalized is
depreciated over the period of the useful life of the
related asset.
Fixed Assets costing upto Rs 5 thousand are being fully
depreciated within one year from the date of acquisition.
5. REVENUE RECOGNITION AND RECEIVABLES
Mobile Services
Bharti Airtel Annual Report 2009-10
Service revenue is recognised on completion of provision
of services. Service revenue includes income on roaming
commission and an access charge recovered from
other operators, and is net of discounts and waivers.
Revenue, net of discount, is recognised on transfer of
all significant risks and rewards to the customer and
when no significant uncertainty exists regarding
realisation of consideration.
Processing fees on recharge is being recognised over the
estimated customer relationship period or voucher
validity period, as applicable.
Revenue from prepaid calling cards packs is recognised on
the actual usage basis.
Telemedia Services (Erstwhile Broadband & Telephone
Services)
Service revenue is recognised on completion of provision
of services. Revenue is recognised when no significant
uncertainty exists regarding realisation of consideration.
81