Notes to the Financial Statements 31 December 2021 160 Digi.Com Berhad At A Glance Message To Shareholders How We Create Value Strategies To Create Value 2. Significant accounting policies (CoNT’D.) 2.15 Leases (Cont’d.) Group as a lessee (Cont’d.) (c) Short-term leases and leases of low-value assets TheGroup applies the short-term lease recognition exemption to its short-term leases of telecommunication network sites, equipment and billboard spaces (i.e., those leases that have a lease term of 12 months or less from the commencement date). It also applies the lease of low-value assets recognition exemption to leases of office equipment and storage spaces that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as an expense on a straight-line basis over the lease term. Group as a lessor Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. 2.16 Employee benefits (a) Short-term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the period in which the associated services are rendered by employees. Short-term accumulated compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences netted off against annual leave utilised to date, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (b) Defined contribution plan As required by law, companies in Malaysia make contributions to the state-defined contribution pension scheme known as the Employee Provident Fund,and will have no legal or constructive obligation to make further contributions in the future, over-and-above what is existingly legally required.The contributions are recognised as an expense in profit and loss in the period which the related services are rendered by employees.
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