2009 - TDM Berhad

TDM Berhad (6265-P) 77Notes to the Financial Statements2. Significant Accounting Policies (cont’d.)2.2 Summary of significant accounting policies (cont’d.)(j) Income taxIncome tax on the profi t or loss for the year comprises current and deferred tax. Current tax is the expected amount of incometaxes payable in respect of the taxable profi t for the year and is measured using the tax rates that have been enacted at thebalance sheet date.Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporarydifferences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused taxcredits to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences,unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arisesfrom goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a businesscombination and at the time of the transaction, affects neither accounting profi t nor taxable profi t.Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability issettled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognisedas income or an expense and included in the income statement for the period, except when it arises from a transaction whichis recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from abusiness combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amountof any excess of the acquirer’s interest is the net fair value of the acquiree’s identifi able assets, liabilities and contingent liabilitiesover the cost of the combination.(k)ProvisionsProvisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outfl owof resources embodying economic benefi ts will be required to settle the obligation, and a reliable estimate of the amount can bemade. Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. Where the effect ofthe time value of money is material, provisions are discounted using a current pre-tax rate that refl ects, where appropriate, therisks specifi c to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognisedas fi nance cost.(l)Employee benefits(i) Short term benefitsWages, salaries, bonuses and social security contributions are recognised as an expense in the year in which theassociated services are rendered by employees of the Group. Short term accumulating compensated absences suchas paid annual leave are recognised when services are rendered by employees that increase their entitlement to futurecompensated absences, and short term non-accumulating compensated absences such as sick leave are recognisedwhen the absences occur.(ii)Defined contribution plansDefi ned contribution plans are post-employment benefi t plans under which the Group pays fi xed contributions intoseparate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the fundsdo not hold suffi cient assets to pay all employee benefi ts relating to employee services in the current and precedingfi nancial years. Such contributions are recognised as an expense in the profi t or loss as incurred. As required by law,the Group and the Company make such contributions to the Employees Provident Fund (“EPF”).