China XLX Fertiliser Ltd

NOTES TO THE FINANCIAL STATEMENTS31 December 20082. Summary of significant accounting policies (cont’d)2.19 RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Groupand the revenue can be reliably measured. Revenue is measured at the fair value of consideration receivedor receivable.(a)Sale of goodsRevenue from sale of goods is recognised upon the transfer of significant risk and rewards ofownership of the goods to the customers, which generally coincides with delivery and acceptanceof the goods sold. Revenue is not recognised to the extent where there are significant uncertaintiesregarding recovery of the consideration due, associated costs or the possible return of goods.(b)Rendering of servicesRevenue from the rendering of consultation and marketing services to the Urea distributors and endconsumers is recognised on a straight line basis over the contracted period of service.(c)Interest income2.20 Income taxesInterest income is recognised using the effective interest method.(a)Current taxCurrent tax assets and liabilities for the current and prior periods are measured at the amountexpected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used tocompute the amount are those that are enacted or substantively enacted by the balance sheet date.Current taxes are recognised in the income statement except that tax relating to items recogniseddirectly in equity is recognised directly in equity.(b)Deferred taxDeferred tax is provided using the liability method on temporary differences at the balance sheetdate between the tax bases of assets and liabilities and their carrying amounts for financial reportingpurposes.Deferred tax assets and liabilities are recognised for all temporary differences, except:- Where the deferred tax arises from the initial recognition of an asset or liability in atransaction that is not a business combination and, at the time of the transaction affectsneither accounting profit nor taxable profit or loss;- In respect of temporary differences associated with investments in subsidiaries, associates andinterests in joint ventures, where the timing of the reversal of the temporary differences canbe controlled by the Group and it is probable that the temporary differences will not reversein the foreseeable future; andChina XLX Fertiliser Ltd.57