TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
58
Notes to the financial statements
For the financial year ended 31 March 2016
2.
Summary of significant accounting policies (cont’d)
2.23
Taxes (cont’d)
(b)
Deferred tax (cont’d)
Deferred tax assets are recognised for all deductible temporary differences, the 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 forward of unused tax credits and unused tax losses can be
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 associated with 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 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 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 to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of each reporting period.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit 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.
(c)
Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
–
Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
–
Receivables and payables that are stated with the amount of sales tax included.
