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Revenue
receivable from foreign operators is recognised
solely on the basis of their statements.
Connection
fees are treated as deferred income and credited
to the income statement over 15 years, being
an estimate of the period over which the related
assets are depreciated. The element of deferred
income credited to profit annually is included
in the revenue. The accounting records do
not provide details of the connection charges
received in previous years. Hence estimates
have been made, on the basis of the best information
available, of the appropriate amounts of connection
fees to defer and credit to income.
18.
Comparatives
Where necessary, comparative figures have
been adjusted to conform with a change in
accounting policy on goodwill and with changes
in presentation in the current year.
The
policy followed by the Company in accounting
for goodwill, which represents the excess
of share capital of SLTL over the aggregate
of the values of the separable net assets
of SLT (Corporation) on 25 September 1996
when SLT was converted to SLTL, was changed
during the year. The Share Capital, specified
in the Memorandum of Association of SLTL in
accordance with the Government Gazette No.
942/7 of 25 September 1996, was based on retained
earnings shown in the unaudited accounts of
SLT (Corporation) as at 31 December 1995.
However, on the completion
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of
the audit for the year ended 31 December 1995
the retained earnings reflected in those financial
statements were adjusted to reduce the said
figure by approximately Rs. 4,747 million.
After the year end (31 December 1995), Rs.
392 million of those adjustments were reversed
as the income taxes up to 1994 had been since
agreed and settled. Accordingly, the goodwill
figure of Rs. 3,441 million at 1 January 1997
is net of these adjustments.
Goodwill,
which was previously amortised over 5 years
commencing from 1 January 1997, has now been
set-off against Advances toward Share Capital,
which, as explained in note 22 to the financial
statements, represents the custom duty waivers
of Rs. 3,010 million on equipment imported
for the 150,000 line project. Since the value
of goodwill, Rs. 3,441 million at the time
of conversion, exceeded the value of Advances
toward Share Capital by Rs. 431 million, the
excess has been charged to the income statement
during the year ended 31 December 1997. The
Directors are of the view that the proposed
treatment gives a fairer picture of the results
for the year and the assets and liabilities
at the balance sheet date.
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