0175 Geely Automobile Holdings Limited Annual Report 2011

Annual Report 2011Geely Automobile Holdings LimitedNOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSFor the year ended 31 December 20115. Significant Accounting Policies (Continued)(l)Taxation (Continued)The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to theextent that it is no longer probable that sufficient taxable profit will be available to allow all or part of theasset to be recovered.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settledor the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enactedby the balance sheet date. Deferred tax is charged or credited to the consolidated income statement,except when it relates to items charged or credited directly to other comprehensive income or equity, inwhich case the deferred tax is also dealt with in other comprehensive income or equity.(m)Equity-settled share-based transactionsFor share options granted to employees, the fair value of services received determined by reference to thefair value of share options granted at the grant date is expensed on a straight-line basis over the vestingperiod, with a corresponding increase in equity (share option reserve).At each balance sheet date, the Group revises its estimates of the number of options that are expectedto ultimately vest. The effect of the change in estimate, if any, is recognised in the consolidated incomestatement with a corresponding adjustment to share option reserve.At the time when the share options are exercised, the amount previously recognised in share optionreserve will be transferred to share capital and share premium. When the share options are forfeited afterthe vesting date or are still not exercised at the expiry date, the amount previously recognised in shareoption reserve will be transferred to accumulated profits.If the share options granted are cancelled or settled during the vesting period (other than a grant cancelledby forfeiture when the vesting conditions are not satisfied), the cancellation or settlement is accounted foras an acceleration of vesting, and the amount that otherwise would have been recognised for servicesreceived over the remainder of the vesting period is recognised immediately in profit or loss.(n)(o)Retirement benefit costsPayments to the Group’s Mandatory Provident Fund Scheme (“MPF Scheme”) in Hong Kong, the statemanagedretirement benefit scheme in the People’s Republic of China and defined contribution superannuationfunds in other overseas countries are charged as expenses as they fall due.LeasingLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risksand rewards of ownership to the lessee. All other leases are classified as operating leases.Rentals payable under operating leases are charged to the consolidated income statement on a straightlinebasis over the term of the relevant lease. Benefits received and receivable as an incentive to enter intoan operating lease are recognised as a reduction of rental expense over the lease term on a straight-linebasis.76