Pg 147 - Berjaya Corporation Berhad

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Berjaya Land Berhad (201765-A) 52 Annual Report 2005 Notes To The Financial Statements 30 April 2005 2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (k) Employee benefits (i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (ii) (iii) Defined contribution plans Contributions relating to defined contribution plans are charged to the income statement when incurred. Retirement benefits for employees of foreign subsidiary companies are accrued for in accordance with the provisions of those foreign countries’ retirement law and are charged to income statement in the period to which they relate. Defined benefit plans Certain subsidiary companies within the Group operate unfunded, defined benefit Retirement Benefit Schemes (“the Scheme”) for their eligible employees. The Group’s obligations under the Scheme are calculated using the Projected Unit Credit Method determined based on actuarial computations by independent actuaries, through which the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted in order to determine its present value. Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the present value of the defined benefits obligation. Past service costs are recognised immediately to the extent that the benefit are already vested, and otherwise is amortised on a straight-line basis over the average period until the amended benefits become vested. The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost. (l) Income Taxes Tax on profit or loss for the year comprises current and deferred tax. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of the previous year. Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not recognised on temporary differences arising from goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that at the time of transaction affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. (m) Foreign Currencies Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange ruling at the transaction dates or, where settlement had not taken place at 30 April, at rates of exchange ruling at the date or at contracted rates, as applicable. Exchange differences arising on long term inter-company advances that, in substance, form part of an enterprise’s net investment in a foreign subsidiary are taken directly to an exchange reserve account. All other exchange differences arising are dealt with through the income statement.
Berjaya Land Berhad (201765-A) Annual Report 2005 53 2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (m) Foreign Currencies (Cont’d) Assets (including goodwill) and liabilities and trading results of foreign subsidiaries are translated into Ringgit Malaysia at the approximate rates of exchange ruling at the balance sheet date except for share capital which is included at historical rate. All exchange differences on translation are taken directly to an exchange reserve account. The principal closing rates used in translation are as follows: 30 April 2005 30 April 2004 Foreign currency RM RM 1 United States Dollar 3.800 3.800 1 Singapore Dollar 2.307 2.229 1 Fijian Dollar 2.275 2.150 1 Australian Dollar 2.962 2.732 1 Sterling Pound 7.256 6.732 1 Mauritius Rupee 0.131 0.141 1 Sri Lanka Rupee 0.038 0.039 1 Seychelles Rupee 0.733 0.725 1 Hong Kong Dollar 0.487 0.487 1 Philippine Peso 0.070 0.068 1 Indian Rupee 0.087 0.086 (n) Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of provision is the present value of the expenditure expected to be required to settle the obligation. (o) Impairment of Assets At each balance sheet date, the Group reviews the carrying amounts of its assets other than inventories, receivables, other non-current investments and marketable securities, to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows. An impairment loss is recognised as an expense in the income statement immediately. Reversal of impairment losses recognised in prior years is recorded when the impairment losses recognised for the asset have decreased. (p) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. (i) Other Non-Current Investments Non-current investments comprise quoted and unquoted securities, bonds and warrants but exclude investments in subsidiary and associated companies. Other non-current investments are stated at cost less accumulated impairment losses. Such impairment is made when there is a decline, other than temporary, in value of investments and it is recognised as an expense in the period in which the decline occurred. (ii) Receivables Trade and other receivables are carried at anticipated realisable value. All known bad debts are written off while doubtful debts are provided for based on estimates of possible losses that may arise from non-collection.
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Pg 147 - Berjaya Corporation Berhad

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