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NOTES TO THE FINANCIAL STATEMENTS
For the Ànancial year ended 31 December 2013
99
Annual Report 2013
F i nanc i a l Statement s
2.
Significant accounting policies
(continued)
2.19 Income taxes (continued)
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 utilised.
Deferred income tax is measured:
(i)
at the tax rates that are expected to apply when the related deferred income tax asset is realised 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, except for investment
properties. Investment property measured at fair value is presumed to be recovered entirely through sale.
Current and deferred income tax are recognised as income or expense in the income statement, 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.
2.20 Provisions
Provisions for warranty and other liabilities are recognised when the Group has a present legal or constructive
obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle
the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating
losses.
The Group recognises the estimated liability to repair or replace products still under warranty at the balance sheet
date. This provision is calculated based on estimates by technical engineers and historical experience of the level of
repairs and replacements.
Other provisions are measured at the present value of the expenditure expected to be required to settle the
obligation using a pre-tax discount rate that reflects the current market assessment of the time value of money and
the risks specific to the obligation. The increase in the provision due to the passage of time is recognised in the
income statement as finance expense.
Changes in the estimated timing or amount of the expenditure or discount rate are recognised in the income
statement when the changes arise.
2.21 Employee compensation
Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.
(a)
Defined contribution plans
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 social security plans in the
People’s Republic of China (“PRC”) on a mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid.
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