Trade goods provided to the Group before

Trade credit is possibly the most vital and easiest
source of short-term finance available to commerce. It is a deal to purchase
goods or services on account without making cheque payments or cash
immediately. (Global body for professional accountants, 2015) An amount billed
to a corporation by its suppliers for goods delivered to or services consumed
by the corporation in the general course of trade is called as trade payable. (James
Wilkinson, 2013) For Axiata Group Berhad, trade payables indicate that
liabilities for services and goods provided to the Group before the financial
year end which are unpaid. Unless the payment amount is not due within a year
after the period of reporting, trade payables are categorized as current
liabilities. They are showed as non-current liabilities, if not. Hence, the
amount owed by trade payables of the Group is RM 2,315,013,000 in 2016. By using
the effective interest method, trade payables are generally recognized
initially at fair value and subsequently measured at amortized cost. (Axiata
Group Berhad, 2016) Furthermore, this short term financing is a helpful tool
for developing commerce in managing the capital requirements of a business. The Group would retain cash
in the short-term for other capital requirements since does not have to pay
cash up front. The Group has ongoing investment decisions and expenses to make.
The Group can more capably take care of its immediate cash requirements whilst having
time to plan for payment due to delaying payment for a short period on
purchases. Moreover, this financing can fulfill the needs of the Group that
include supply and inventory replenishment. If the Group has low cash on hand and an
urgent order of a large quantity of products, it requires to purchasing products
or raw materials from trade account. Essentially, the trade account helps avoid
delays in business activity and performance. (Neil Kokemuller, 2017)

       
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The lessor transfers to the lessee in return for a
payment, the right to use an asset for an agreed date whereby it is an
agreement of lease. Axiata Group Berhad has substantively all the rewards and
risks of ownership of leases of plant, property and equipment (PPE) is
categorized as finance leases. Finance lease is exploited at the lease’s
commencement at the present value of the minimum lease payments and the lower
of the leased property’s fair value. In order to achieve an unchanging rate of
interest on the liability’s remaining balance, every lease payment is distributed
between finance charges and liability. In addition, for each period, to produce
a constant fixed rate of interest on the liability’s remaining balance due to the
finance cost is charged to profit or loss over the lease period. The PPE is
depreciated over a short useful life of the asset and acquired under finance
leases. At the end of the lease term, the Group will obtain ownership if there
is no rational certainty. Besides, deferred gain from sale and finance lease
back transaction is amortized over the lease term by using straight line method.
At the end of financial period 2016, deferred gain from sale and finance lease
back of Axiata Group Berhad is RM 1,053,855,000. Initial direct costs of negotiating
and arranging finance leases which incurred by the Group are added to the
carrying amount of the leased assets and known as lease expense in profit or
loss over the lease period. (Annual Report, 2016) Other than that, the Group is
able to enjoy a lot of tax concession on this type of financing as lease or
rental payments are deductible from taxable income. Finance leases are a cheaper
source of financing than almost all other sources of financing because leasing allows
the Group to get equipment without going through rigid official procedure. Therefore,
lease financing is faster and cheaper.