ANNUAL REPORT 2011 - Horse Racing Ireland

STATEMENT OF ACCOUNTING POLICIES (CONTINUED)Deferred taxDeferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.Provision is made at the rates expected to apply when the timing differences reverse. Timing differences are differencesbetween the company’s taxable profits and its results as stated in the financial statements that arise from the inclusion ofgains and losses in periods different from those in which they are recognised in the financial statements.A net deferred asset is regarded as recoverable and recognised only when, on the basis of all available evidence, it can beregarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlyingtiming differences can be deducted.Investment propertiesInvestment properties owned by group companies are revalued annually and are not depreciated or amortised. This treatmentis a departure from the requirement of Company Law to provide depreciation on all fixed assets, which have a limited usefullife. However, these investment properties are not held for consumption but for investment. The directors believe that thepolicy of not providing depreciation is necessary in order for the financial statements to give a true and fair view, since thecurrent value of investment properties and changes to that current value are of prime importance rather than the calculation ofannual depreciation.Surpluses and deficits arising in the value of investment properties are disclosed as a movement on the InvestmentRevaluation Reserve through the Statement of Total Recognised Gains and Losses. In the event of the Investment RevaluationReserve being insufficient to cover a diminution in value, the amount by which the diminution exceeds the reserve is chargedto the Income and Expenditure account.30 Horse Racing Ireland Annual Report 2011