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SEE HUP SENG LIMITED
Annual Report 2012
54
Notes to the Financial Statements
31 DECEMBER 2012
2 Significant Accounting Policies (Continued)
(r) Income Taxes (Continued)
A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries
and associated company, except where the Group is able to control the timing of the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future.
A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will
be available against which the deductible temporary differences and tax losses can be recognised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred income tax is measured:
(i) at the tax rates that are expected to apply when the related deferred income tax asset is
recognised or the deferred income tax liability is settled, based on tax rates and tax laws that
have been enacted or substantively enacted by the balance sheet date; and
(ii) based on the tax consequence that will follow from the manner in which the Group expects, at
the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred income taxes are recognised as income or expense in profit or loss, except to
the extent that the tax arises from a business combination or a transaction which is recognised directly
in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.
(s) Employee Compensations
(i) Defined contribution plan
Defined contribution plans are post-employment benefit plans under which the Group pays fixed
contributions into separate entities such as the Central Provident Fund, and will have no legal or
constructive obligation to pay further contributions if any of the funds do not hold sufficient assets
to pay all employee benefits relating to employee services in the current and preceding financial
years. The Group’s contributions to defined contribution plans are recognised in the financial year
to which they relate.
(ii) Employee leave entitlement
Employee entitlements to annual leave and long service leave are recognised when they accrue to
employees. A provision is made for the estimated liabilities for annual leave as a result of services
rendered by employees up to the balance sheet date.