Page 247 - PWA_2023_Annual_Report

Provincial Waterworks Authority Annual Report 2023 245

3. Significant Accounting Policies (Cont.)
3.13 Lease
PWA as a lessor
PWA granted leases of buildings, construction, and water supply systems. Leases are classified
as operating leases or capital leases. If the circumstances indicate that all or almost all risks and returns
that the owner may receive are transferred to the lessee, such leases are classified as capital leases.
If the leases do not transfer all or almost all of the risks and returns to the lessee, they are classified
as operating leases.
Revenues from operating leases are recognized by the straight-line method over the lease
term. The initial direct cost incurred is included in the book value of underlying assets and recognized
as an expense over the lease term. For capital leases, the cost is recognized as lease receivables by net
investment value over the lease term which reflects the fixed rate of return on net investment under the
lease.
PWA as a lessee
Right-of-use Assets
PWA recognized right-of-use assets at the effective date of lease agreement. Right-of-use assets
are measured at cost price deducting accumulative depreciation and accumulative impairment loss.
Cost of right-of-use assets consists of the amount of lease liabilities from the initial measurement, incurred
initial direct costs, and lease payment at the effective date of the lease agreement.

Lease Liabilities
As at the effective date of lease agreement, PWA recognized lease liabilities by the present
value of the amount payable under the lease discounting with the implied interest rate or the interest rate
on PWA’s additional loan after the effective date of lease agreement. The book value of lease liabilities will
increase by reflecting the interest of lease liabilities and will decrease by reflecting the payment of paid
outstanding lease. In addition, the book value of lease liabilities is revalued when the lease agreement is
changed or reassessed.
Short-term Leases and Low-value Leases
The amount payable under leases with a 12-month term or less from the effective date of the
lease or leases of underlying assets with a value lower than 150,000 baht will be recognized as an expense
according to the straight-line method over the lease term.
3.14 Financial Instruments
Classification and Measurement
Financial assets of cash and cash equivalents and deposits at bank with limitations are classified
by amortized cost and subsequent measurement with effective interest rate method.
PWA measured financial assets of equity by fair value through other comprehensive income,
which cannot be transferred to profit and loss.
For financial liabilities, PWA measured initial value by fair value plus transaction cost,
as well as recognized the paid interest and amortized financial liabilities using effective interest rate method.
Impairment of Financial Assets
PWA measured the value of expected credit loss equal to the expected credit loss over the
life of financial instruments for receivables and measured the expected credit loss in the next 12 months
for financial assets with low credit risk.