Page 105 - S P Setia Annual Report 2013
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Annual Report 2013 S P SETIA BERHAD GROUP Financial Statements | 103





NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2013 (CONT’D)






1. SiGniFicant accOUntinG POlicieS (cOnt’D)

(d) Signifcant accounting judgements and estimates (cont’d)
(ii) Key sources of estimation uncertainty (cont’d)

Income taxes

Signifcant judgement is involved in determining the capital allowances and deductibility of certain expenses during the estimation
of the provision for income tax. There are certain transactions and computations for which the ultimate tax determination is
uncertain during the ordinary course of business.
The Group and the Company recognise liabilities for expected tax issues based on estimates of whether additional taxes will be
due. Where the fnal tax outcome of these matters is different from the amounts that were initially recognised, such differences will
impact the income tax and deferred tax provisions in the period in which such determination is made.

The carrying amount of the Group’s and the Company’s tax assets as at 31 October 2013 were RM30,541,000 and RM62,000 (2012
: RM18,759,000 and RM4,454,000), respectively.

The carrying amount of the Group’s tax liabilities as at 31 October 2013 was RM37,540,000 (2012 : RM47,916,000).

Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences, unabsorbed capital allowances and unutilised tax
losses to the extent that it is probable that taxable proft will be available in future against which the deductible temporary
differences, capital allowances and tax losses can be utilised.

Signifcant management judgement is required to determine the amount of deferred tax assets that can be recognised, based
upon the likely timing and level of future taxable profts together with future tax planning strategies.

The carrying amount of the Group’s and the Company’s recognised deferred tax assets as at 31 October 2013 were RM167,885,000
and RM6,000 (2012 : RM93,779,000 and RM214,000), respectively.
The carrying amount of the Group’s unrecognised deferred tax assets as at 31 October 2013 was RM70,544,000 (2012 :
RM136,533,000).
Revenue recognition of property development activities and construction contracts

The Group recognises property development activities and construction contracts based on the percentage of completion method.
The stage of completion of the property development activities and construction contracts is measured in accordance with the
accounting policies set out in 1(n) and 1(o) below.

Signifcant judgement is required in determining the percentage of completion, the extent of the development project and contract
costs incurred, the estimated total revenue and total costs and the recoverability of the development project and contract. In
making these judgements, management relies on past experience and the work of specialists.

(e) Subsidiary companies

A subsidiary company is an entity controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern
the fnancial and operating policies of an entity so as to obtain benefts from its activities. The existence and effect of potential voting
rights that are currently exercisable or convertible, are considered when assessing whether the Group has the power to govern the
fnancial and operating policies of another entity.
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