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Government Grant : Maxis & DiGi

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Definition of Government Grants
(Para 3 MFRS 120 Accounting for Government Grants and Disclosures of Government
Assistance)
The assistance by government in the form of transfers of resources to an entity in
return for past or future compliance with certain conditions relating to the operating
activities of the entity. They exclude those forms of government assistance which cannot
reasonably have a valued placed upon them and transactions with government which cannot
be distinguished from the normal trading transactions of the entity. In other meaning, an
award of financial assistance in the form of money by the federal government to an eligible
grantee with no expectation that the funds will be paid back. The term does not include
technical assistance which provides services instead of money, or other assistance in the form
of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct
appropriations.
EXPLANATIONS
(Para 4 MFRS 120 Accounting for Government Grants and Disclosures of Government
Assistance)
The receipt of government grants by an enterprise is significant for preparation of the
financial statements for two reasons. Firstly, if a government grant has been received, an
appropriate method of accounting therefor is necessary. Secondly, it is desirable to give an
indication of the extent to which the enterprise has benefited from such grant during the
reporting period. This facilitates comparison of an enterprises financial statements with those
of prior periods and with those of other enterprises.





PART I : I NTRODUCTI ON
Government Grant : Maxis & DiGi
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NAME OF THE CORPORATION :
Maxis Berhad
LOCATION OF CORPORATE HEADQUARTERS :
Maxis Tower, Kuala Lumpur City Centre
FISCAL YEAR END OF ANNUAL REPORT :
31 December 2013
INTERNET ADDRESS OF COMPANY :
maxis.com.my
COMPANYS BUSINESS ACTIVITIES :
Maxis is among the leading communications service provider in Malaysia. Maxis start
their operation on 1995. They provide a variety of communication products, application and
value added services for customer, large enterprises and small & medium business owners.
They provide multi-channel customer service; customers are able to reach Maxis service
representatives via telephone, web and social media platforms. They were the first to bring
the iPhone, BlackBerry and Samsung Galaxy to the Malaysian market. They offer prepaid
data plans, call plans and SMS plans, postpaid data plans, call plans and SMS plans, devices,
wireless broadband, fibre internet, international roaming, MMS, WAP (over both GSM and
GPRS) and residential fixed line services. For business customers, Maxis offer cloud
computing, data storage, machine-to-machine services, fixed high speed internet, VSAT
services (satellite based communications), call conferencing and a variety of mobile plans.
Maxis also provides online games and music store for its customers to download multimedia
content. Majority of the company share is owned by Ananda Krishnan









NAME OF THE CORPORATION :
DiGi Telecommunications Sdn. Bhd
Government Grant : Maxis & DiGi
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LOCATION OF CORPORATE HEADQUARTERS :
D'House, Subang Hi-Tech Industrial Park, Shah Alam, Selangor
FISCAL YEAR END OF ANNUAL REPORT :
31 December 2013
INTERNET ADDRESS OF COMPANY :
www.digi.com.my
COMPANYS BUSINESS ACTIVITIES :
Mobile service provider in Malaysia. On 24 May 1995 DiGi became the first telco in
Malaysia to launch and operate a fully digital cellular network. DiGi Telecommunications
Sdn. Bhd. provides a variety of mobile communication services. These services include voice
under their prepaid plans & postpaid plans, SMS, data plans and services, international
roaming, international calling card and WAP services. DiGi Telecommunications Sdn. Bhd.
started a project called 'Happy'. A group of DiGi Telecommunications Sdn. Bhd. staff handle
this special project and provide a new brand of Mobile Virtual Network Operators (MVNO)
called Happy Prepaid. DiGi is also the second operator in Malaysia to offer the iPhone on
April 1, 2010. DiGi is the first Telco in Malaysia to introduce Mobile Number Selection
service which was implemented in 2008. This service enable the subscriber to choose their
own number instead of following the traditional way of purchasing a new SIM that has been
pre-assign with fix mobile number. Since December 2011, DiGi began upgrading its network
of 5,000 network sites to LTE. The upgrade is to allow expanding its EDGE and 3G services
(into using dual-channel HSPA+) to 95.8% of Malaysians and having a greener and energy-
efficient environment.





PART I I : DI SCLOSURE
Government Grant : Maxis & DiGi
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According to the MFRS 120 state that the following should be disclosed :
a) the accounting policy adopted for government grant,including the methods of
presentation adopted in the financial statements.
b) The nature and extent of government grants recognised in the financial statements and
indications of other forms of government assistance
c) Unfulfilled conditions and other contingencies attached to government assistance that
has been recognised.

DIGI COMPANY
The government grant is recognised as at their fair values where there is reasonable
assurance that the grant will be received.
A grant related to asset is recognised as income over the life of the depreciable assets
by way of a reduced depreciation charged.
Grant related to income is recognised in profit and loss by crediting against related expenses.
MAXIS COMPANY
The government grant is recognised as at their fair values where there is reasonable
assurance that the grant will be received.
Government grant relating to costs are deffered and recognised in the statementof
profit or loss over the financial period necessary to match them with the costs they intended
to compensate.
Government grants relating to the purchase of assets are included in payables and
accruals as government grant and are credited to the statement profit or loss on a straight line
basis over the expected useful life of the related assets.






PRESENTATI ON
Government Grant : Maxis & DiGi
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1. Grants related to specific fixed assets
Grants related to specific fixed assets are government grants whose primary condition
is that an enterprise qualifying for them should purchase, construct or otherwise acquire such
assets. Other conditions may also be attached restricting the type or location of the assets or
the periods duringwhich they are to be acquired or held.

Two methods of presentation in financial statements of grants (or the appropriate
portions of grants) related to specific fixed assets are regarded as acceptable alternatives.

Under one method (Write Off Against Asset), the grant is shown as a deduction from
the gross value of the asset concerned in arriving at its book value. The grant is thus
recognised in the profit and loss statement over the useful life of a depreciable asset by way
of a reduced depreciation charge. Where the whole, or virtually the whole, of the cost of the
asset, the asset is shown in the balance sheet at a nominal value.

Under the other method (Deferred I ncome), grants related to depreciable assets are
treated as deferred income which is recognised in the profit and loss statement on a
depreciation on related assets is charged. Grants related to non-depreciable assets are credited
to capital reserve under this method, as there is usually no charge to income in respect of such
assets. However, if a grant related to a non-depreciable asset requires the fulfillment of
certain obligations, the grant is credited to income over the same period over which the cost
of meeting such obligations is charged to income. The deferred income is suitably disclosed
in the balance sheet pending its apportionment to profit and loss account. For example, in the
case of a company, it is shown after Reserves and Surplus but before Secured Loans with
a suitable.

The purchase of assets and the receipt of related grants can cause major movements in
the cash flow of an enterprise. For this reason and in order to show the gross investment in
assets, such movements are often disclosed as separate items in the statement of changes in
financial position regardless of whether or not the grant is deducted from the related asset for
the purpose of balance sheet presentation.

2. Presentation of Grants Related to Revenue
Government Grant : Maxis & DiGi
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Grants related to revenue are sometimes presented as a credit in the profit and loss
statement, either separately or under a general heading such as Other Income. Alternatively,
they are deducted in reporting the related expense.

Supporters of the first method claim that it is inappropriate to net income and expense
items and that separation of the grant from the expense facilitates comparison with other
expenses not affected by a grant. For the second method, it is argued that the expense might
well not have been incurred by the enterprise if the grant had not been available and
presentation


























Government Grant : Maxis & DiGi
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Both company of Maxis and DiGi was use Grants Related to Fixed Assets, under the
Deferred Income Method. Grants related to assets are grants given to any entity to help
purchase, construct or acquire non-current assets. They may come with conditions which
restrict the type or location of the asset or the period during which they are to be acquired or
held.
Maxis :
Notes To Financial Position (extract):


DiGi:
Statement of Cash Flow (extract) :


Government Grant : Maxis & DiGi
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APPENDIX:
Maxis


Government Grant : Maxis & DiGi
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APPENDIX:
DiGi

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