annual report - Tenaga Nasional Berhad

Notes To The Financial Statements2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)(u)Share capital(i)ClassificationOrdinary shares and non-redeemable preference shares with discretionary dividends are classified as equity. Othershares are classified as equity and/or liability according to the economic substance of the particular instrument.The portion of a convertible bond representing the value of the conversion option at the time of issue is includedin equity (see Note 2(v) on borrowings). The value of the conversion option is not changed in subsequentperiods. Upon conversion of the bond to equity shares, the amount credited to share capital and share premiumis the aggregate of the amounts classified within liability and equity at the time of conversion. No gain or loss isrecognised. If the bond is redeemed, the conversion option is transferred to retained earnings.Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity.(ii)(iii)Share issue costsIncremental external costs directly attributable to the issuance of new shares or options are shown in equity asa deduction, net of tax, from the proceeds.Dividends to shareholders of the CompanyDividends on redeemable preference shares are recognised as a liability and expressed on an accrual basis.Other dividends are recognised as a liability in the period in which they are declared.(v)BorrowingsBorrowings are initially recognised based on the proceeds received. The costs of issuing debt instruments areexpensed as and when incurred.Interest and dividends on financial instruments deemed as borrowings are reported within finance cost in theincome statement.(w) Income taxCurrent tax expense is determined according to Malaysia’s tax laws.[ Tenaga Nasional Berhad ] [ Annual Report 2008 ]194(x)Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amountsattributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against whichthe deductible temporary differences, unused tax losses and unutilised tax credits can be utilised.Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and jointventures except where the timing of the reversal of the temporary difference can be controlled and it is probablethat the temporary difference will not reverse in the foreseeable future.Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax.Employee benefits(i) Short term employee benefitsWages, salaries, paid annual leave, bonuses, and non-monetary benefits are accrued in the financial year inwhich the services are rendered by employees of the Group.