Annual Report 2008-2009 - Emirates.com

3. Critical accounting estimates and judgements (continued)
Taxation
Income tax liabilities are not provided for when management is of the firm opinion that exemption from income tax will ultimately be
granted by the relevant authorities in the concerned jurisdictions. In making its judgement, management considers the status of
discussions with the relevant authorities in different countries, the existence of reciprocal exemptions or of a memorandum of
understanding. The resolution of issues is not always within the control of management and is often dependant upon external parties.
When, due to a change in circumstances, it is unlikely that a tax exemption will be obtained, the income tax liability is fully provided for on
a conservative basis till a resolution is reached or the final tax outcome is determined.
Impairment of unquoted available-for-sale financial assets
In arriving at the fair value of its shareholding in SriLankan Airlines Ltd, management has considered various factors. SriLankan Airlines
Limited is the national carrier of a country with a population in excess of twenty million and has profitable lines of business in its terminal
handling services and inflight services units at the country’s main gateway, Bandaranaike International Airport, Katunayke, Sri Lanka. In a
situation of limited current observable data, the carrying value of the investment represents management’s best estimate of the
discounted future cash flows arising from the investment.
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