Download - Tenaga Nasional Berhad

TNB Financial Report 2002
29
2. Summary of Significant Accounting Policies (Continued)
(k)
Deferred taxation
The tax expense is determined on the basis of tax effect accounting using the liability method. Deferred taxation is recognised for timing
differences except when there is reasonable evidence that such timing differences will not reverse in the foreseeable future. The tax effect
of timing differences that result in a debit balance or a debit to the deferred tax balance is not carried forward unless there is a reasonable
expectation of its realisation.
The potential tax saving relating to a tax loss carry forward is only recognised if there is assurance beyond reasonable doubt that future
taxable income will be sufficient for the benefit of the loss to be realised.
(l)
Investments
Investments in subsidiaries, associates and other investments held for long term are stated at cost, less allowance for any permanent
diminution in their value. Allowance for permanent diminution is only made where in the opinion of the Directors, there is a permanent
diminution in value. Permanent diminution in the value of an investment is recognised as an expense in the financial year in which the
diminution is identified.
On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income
statement.
(m)
Deferred income
Contributions received from certain customers to defray the cost of capital projects are credited to the deferred income account. The amount
in this account is released to the income statement on a straight line basis over 15 years, being the average useful life of such projects.
(n)
Operating leases
A group company is the lessee
Leases of assets under which all the rewards and risks of ownership are retained by the lessor are classified as operating leases. Payments
made under operating leases are charged to the income statement on a straight line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of
penalty is recognised as an expense in the period in which termination takes place.
A group company is the lessor
Assets leased out under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over
their expected useful lives on a basis consistent with similar assets.
(o)
Receivables
Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identified. An estimate is
made for doubtful receivables based on review of all outstanding amounts at the financial year end.
(p)
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits held at call with banks, bank
overdrafts and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.