k) Leases
Finance leases
Leases that transfer substantially all the risks and benefits incidental to ownership of the leased asset are classified as finance leases. The Company recognizes finance leases as assets and liabilities in its statements of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Subsequently, minimum lease payments are apportioned between a finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
The depreciation policy for depreciable leased assets is consistent with that for depreciable assets that are owned.
As of December 31, 2017 the Telecom Group hold finance leases which represents liabilities in the amount of $13. The total payable at these leases’ maturity amounts to $13. PP&E related to these financial leases and several of the mentioned leases contracts characteristics as of December 31, 2017 are detailed below:
|
|
|
Book value |
|
Lease term |
|
Depreciation |
|
PP&E – Computer equipment |
|
77 |
|
3 years |
|
3 years |
|
Accumulated depreciation |
|
(64) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying value as of December 31, 2017 |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases
Lease payments under an operating lease are recognized as an expense on a straight-line basis over the lease term unless another systematic basis is more representative.
In the normal course of business, the Company leases cell sites, switch sites, satellite capacity and circuits under various non-cancellable operating leases that expire on various dates through 2035. Rental expenses are included under Interconnection costs and other telecommunication charges and Other operating expenses items lines in the consolidated income statements.