Annual Report 2011 (Part I) - Wawasan TKH Holdings Berhad

WAWASAN TKH HOLDINGS BERHAD (540218-A) • ANNUAL REPORT 2011
049
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2011 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
4.12 Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualified
asset is capitalised as part of the cost of the asset until when substantially all the activities necessary to
prepare the asset for its intended use or sale are complete, after which such expense is charged to profit
or loss. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for
its intended use or sale. Capitalisation of borrowing cost is suspended during extended periods in which
active development is interrupted.
The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the
borrowing during the period less any investment income on the temporary investment of the borrowing.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
4.13 Income taxes
Income taxes include all domestic and foreign taxes on taxable profit. Taxes in the income statements
and statements of comprehensive income comprise current tax and deferred tax.
(a)
Current tax
Current tax is the amount of income taxes payable or receivable in respect of the taxable profit or
loss for a period.
Current tax for the current and prior periods is measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that have been enacted or substantively enacted by the end of the reporting period.
(b)
Deferred tax
Deferred tax is recognised in full using the liability method on temporary differences arising between
the carrying amount of an asset or liability in the statements of financial position and its tax base.
Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill
or the initial recognition of an asset or liability in a transaction which is not a business combination
and at the time of transaction, affects neither accounting profit nor taxable profit.
A deferred tax asset is recognised only to the extent that it is probable that taxable profits will be
available against which the deductible temporary differences, unused tax losses and unused tax
credits can be utilised. The carrying amount of a deferred tax asset is reviewed at the end of each
reporting period. If it is no longer probable that sufficient taxable profits will be available to allow the
benefit of part or that entire deferred tax asset to be utilised, the carrying amount of the deferred
tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will
be available, such reductions will be reversed to the extent of the taxable profits.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when the deferred income taxes relate to the
same taxation authority on either:
(i)
the same taxable entity; or
(ii)
different taxable entities which intend either to settle current tax liabilities and assets on a net
basis, or to realise the assets and settle the liabilities simultaneously, in each future period in
which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
Deferred tax will be recognised as income or expense and included in profit or loss for the period unless
the tax relates to items that are credited or charged, in the same or a different period, directly to equity,
in which case the deferred tax will be charged or credited directly to equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted by the reporting period.