Page 69 - ar2011_2012

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ANNUAL REPORT 2011/2012
Notes to the Financial Statements
2 Summary of Significant Accounting Policies (cont’d)
Income Tax
Income taxes are accounted using the asset and liability method that requires the recognition
of taxes payable or refundable for the current year and deferred tax liabilities and assets for the
future tax consequence of events that have been recognised in the fnancial statements or tax
returns. The measurement of current and deferred tax liabilities and assets is based on provisions
of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates
are not anticipated. Income tax expense represents the sum of the tax currently payable and
deferred tax. Current and deferred income taxes are recognised in the income statement except
that when they relate to items that initially bypass the income statement and are taken to equity,
or in other comprehensive income. Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same income tax authority. The carrying amount of deferred tax
assets is reviewed at each end of the reporting year and is reduced, if necessary, by the amount
of any tax benefts that, based on available evidence, are not expected to be realised. A deferred
tax amount is recognised for all temporary differences, unless the deferred tax amount arises
from the initial recognition of an asset or liability in a transaction which (i) is not a business
combination; and (ii) at the time of the transaction, affects neither accounting proft nor taxable
proft (tax loss). A deferred tax liability is not recognised for all taxable temporary differences
associated with investments in subsidiaries, branches and interests in joint ventures because (a)
the Company is able to control the timing of the reversal of the temporary difference; and (b) it is
probable that the temporary difference will not reverse in the foreseeable future.
Foreign Currencies
The functional currency of the Company is the Singapore dollar as it refects the primary economic
environment in which the entity operates. Transactions in foreign currencies are recorded in the
functional currency at the rates ruling at the dates of the transactions. At each end of the reporting
year, recorded monetary balances and balances measured at fair value that are denominated in
non-functional currencies are reported at the rates ruling at the reporting date and fair value date
respectively. All realised and unrealised exchange adjustment gains and losses are dealt with
in the income statement except when recognised directly in other comprehensive income as
qualifying cash fow hedges.