Annual Accounts and Report as at 30 June 2011 Draft - Mediobanca

Tax assets and liabilitiesIncome taxes are recorded in the profit and loss account, with the exceptionof tax payable on items debited or credited directly to net equity. Provisions forincome tax are calculated on the basis of current, advance and deferredobligations. Advance and deferred tax is calculated on the basis of temporarydifferences – without time limits – between the carrying amount of an asset orliability and its tax base, according to statutory criteria and the correspondingvalues used for tax purposes.Advance tax assets are recognized in the balance sheet based on thelikelihood of their being recovered.Deferred tax liabilities are recognized in the balance sheet with theexception of tax-suspended reserves, if the size of the reserves available alreadysubjected to taxation is such that it may be reasonably assumed that notransactions will be carried out on the Group’s own initiative that might lead totheir being taxed.Deferred tax arising upon business combinations is recognized when this islikely to result in a charge for one of the companies concerned.Tax assets and liabilities are adjusted as and when changes occur in theregulatory framework or in applicable tax rates, inter alia to cover charges thatmight arise in connection with inspections by or disputes with the tax revenueauthorities.Stock options and performance sharesThe stock option and performance share schemes operated on behalf ofGroup staff members and collaborators are treated as a component of labour costs.The fair value of the instruments is measured and recognized in net equity at thegrant date using a share/option pricing method adjusted to reflect historical seriesfor previous financial years. The value thus determined is taken to the profit andloss account pro-rata to the vesting period for the individual awards.Treasury sharesThese are deducted from net equity, and any gains/losses realized ondisposal are recognized in net equity.– 85