Change - S P Setia Berhad

94
Annual report 2008
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2008
1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(w)
Employee benefits (cont’d)
(iii)
Share-based payment transactions
The Group operates an equity-settled share-based compensation plan for its employees. The fair value of share options
granted to employees is recognised as an employee cost over the vesting period with a corresponding increase in the
share option reserve within equity.
The amount to be expensed over the vesting period is determined by reference to the fair value of the share options
at the date of the grant. The fair value of the share option is computed using the binomial model.
The fair value of share options recognised in the share option reserve is transferred to share premium when the share
option is exercised, or transferred directly to unappropriated profit when the share option expires or lapses.
(x)
Borrowing costs
Borrowing costs incurred on assets under development that take a substantial period of time for completion are capitalised
into the carrying value of the assets. Capitalisation of borrowing costs ceases when that assets are completed or during
extended periods when active development is interrupted.
All other borrowing costs are charged to the income statement in the period in which they are incurred. The interest
component of hire purchase payments is charged to the income statement over the hire purchase period so as to give a
constant periodic rate of interest on the remaining tenure of the hire purchase liabilities.
(y)
Taxation
The tax expense in the income statement represents the aggregate amount of current tax and deferred tax included in the
determination of profit or loss for the financial year.
On the balance sheet, a deferred tax liability is recognised for taxable temporary differences while a deferred tax asset is
recognised for deductible temporary differences and unutilised tax losses only to the extent that it is probable that taxable
profit will be available in future against which the deductible temporary differences and tax losses can be utilised.
No deferred tax is recognised for temporary differences arising from the initial recognition of:
(i)
(ii)
goodwill, or
an asset or liability which is not a business combination and at the time of the transaction, affects neither accounting
profit nor taxable profit.
Deferred tax assets and liabilities are measured based on tax consequences that would follow from the manner in which
the asset or liability is expected to be recovered or settled, and based on tax rates enacted or substantively enacted by the
balance sheet date that are expected to apply to the period when the asset is realised or when the liability is settled.
Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged,
whether in the same or a different period, directly to equity.
(z)
Cash equivalents
Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which
are subject to insignificant risk of changes in value.
For the purposes of the cash flow statements, cash and cash equivalents are presented net of bank overdrafts and exclude
fixed deposits, sinking fund accounts and escrow accounts pledged to secure banking facilities.