BAKERTECHNOLOGYLIMITED
ANNUALREPORT2013
98
Notes to the
Financial Statements
for the financial year ended 31December 2013
2.
Summaryof significantaccounting policies (cont’d)
2.20
Taxes (cont’d)
(b)
Deferred tax
Deferred tax is provided using the liabilitymethod on temporary differences at the balance sheet date between the tax
bases of assets and liabilities and their carrying amounts for financial reportingpurposes.
Deferred tax liabilities are recognised for all temporary differences, except:
•
Where thedeferred tax liabilityarises from the initial recognitionofgoodwill orofanassetor liability ina transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
•
In respect of temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differenceswill not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry forwardof unused tax credits and unused tax losses canbe utilised except:
•
where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
•
in respect of deductible temporary differences associatedwith investments in subsidiaries, associates and interests
in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be
available against which the temporary
differences can be utilised.
The carryingamount of deferred tax asset is reviewedat theendof each reportingperiodand reduced to theextent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset tobe recovered.
Deferred tax assets and liabilities aremeasured at the tax rates that are expected to apply to the year when the asset is
realisedor the liability is settled, basedon tax rates and tax laws that have been enactedor substantively enacted at the
end of each reporting period.
Deferred tax relating to items recognisedoutsideprofit or loss is recognisedoutsideprofit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and
deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets
against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that
date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment
would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the
measurement periodor in profit or loss.
