Annual Report 2011/12 - International Entertainment Corporation

Notes to the Consolidated Financial StatementsFor the year ended 31 March 20123. SIGNIFICANT ACCOUNTING POLICIES (Continued)LeasingLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewardsof ownership to the lessee. All other leases are classified as operating leases.The Group as lessorFixed rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of thelease with PAGCOR.Contingent rental income from operating leases to PAGCOR is calculated with reference to certain percentage ofnet gaming revenue of the casino when it is higher than the fixed rental amount. The contingent rental income isrecognised in profit or loss in the period when the relevant net gaming revenue is earned.Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of theleased asset and recognised as an expense on a straight-line basis over the lease term.The Group as lesseeOperating lease payments are recognised as an expense on a straight-line basis over the lease term.In the event that lease incentives are received to enter into operating leases, such incentives are recognised as aliability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis.TaxationIncome tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in theconsolidated income statement because it excludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculatedusing tax rates that have been enacted or substantively enacted by the end of the reporting period.Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in theconsolidated financial statements and the corresponding tax base used in the computation of taxable profit. Deferredtax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognisedfor all deductible temporary difference to the extent that it is probable that taxable profits will be available against whichthose deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition (other than in a business combination) of other assets andliabilities in a transaction that affects neither the taxable profit nor the accounting profit.International Entertainment Corporation - Annual Report 2011/12 45