Annual Report 10/11 - ACL Cables PLC

ACL Cables PLC Annual Report 2010/112.4 Foreign Currency TransactionsForeign currency transactions are accounted for at the exchange rates prevailing at the date ofthe transactions. Gains and losses resulting from the settlement of such transactions and from thetranslation of monetary assets and liabilities denominated in foreign currencies, are recognised inthe income statement. Such balances are translated at exchange rates prevailing at balance sheetdate unless hedged by forward foreign exchange contracts, in which case the rates specified insuch forward contracts are used.2.5 Taxation2.5.1 Provision for income tax is based on the elements of income and expenditure as reportedin the financial statements and is computed in accordance with the provisions of the relevant taxstatutes.2.5.2 Deferred income tax is provided in full, using the balance sheet liability method, for allthe temporary differences arising between the tax bases of assets and liabilities and their carryingamounts in financial statements. The principal temporary differences arise from depreciation onproperty, plant and equipment, provisions for retirement benefit obligations and tax losses carriedforward.Tax rates enacted or substantively enacted by the balance sheet date are used to determinedeferred income tax.2.5.3 Deferred tax assets relating to the carry forward of unused tax losses are recognised tothe extent that it is probable that future taxable profit will be available against which the unusedtax losses can be utilised.2.6 Valuation of Assets and their Bases of Measurement2.6.1 Property, plant and equipment is stated at cost or fair value less accumulated depreciationand any impairment in value.All items of property, plant and equipment are initially recorded at cost. Where items of property,plant and equipment are subsequently revalued, the entire class of such assets are revalued at fairvalue.When an asset is revalued, any increase in the carrying amount is credited directly to a revaluationreserve, except that it is credited to the income statement to the extent that it reverses a previousdeficit recognised as an expense. Any revaluation deficit that offsets previous surplus in the sameasset is directly offset against the surplus in the revaluation reserve and any excess recognisedas an expense. Upon disposal, any revaluation reserve relating to the asset sold is transferred toretained earnings. The difference between depreciation based on the asset’s original cost and thedepreciation based on the revalued amount is transferred from revaluation reserve to retainedearnings.51