DIGI - Annual Report 2021

Notes to the Financial Statements 31 December 2021 165 Integrated Annual Report 2021 Governance Audited Financial Statements Other Information 2. Significant accounting policies (CoNT’D.) 2.19 Revenue recognition (Cont’d.) 2.19.1 Revenue from contracts with customers (Cont’d.) (c) Contract balances (Cont’d.) (iii) Contract liabilities A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract. For prepaid services, a contract liability is recognised when consideration is received from a customer, but services are yet to be performed. (d) Cost to obtain a contract The Group pays sales commissions to external sales channels and employees as an incentive for each new customer registration to the Group’s telecommunication services. Sales commissions have been determined to be an incremental cost of obtaining a contract and are capitalised as contract costs when the Group expects these costs to be recovered over a period of more than one year. Contract costs are amortised on a straight-line basis over the expected customer life cycle,which is consistent with the pattern of the related revenue.For contract costs with an amortisation period of less than one year, the Group has elected to apply the practical expendient to recognise as an expense when incurred. Amortisation of contract costs are included as part of operating expenses in the profit or loss, based on the nature of commission costs, and not under amortisation expenses. The Group recognises an impairment loss in profit or loss to the extent that the carrying amount of the contract costs recognised exceeds the remaining amount of consideration that the Group expects to receive in exchange for the goods or services to which the contract costs relate, less the remaining costs that relate directly to providing those goods or services (that have not been recognised as an expense).

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