CPA Annual Report : CPA Annual report 2012
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable surplus, and is accounted for using the liability method. Except to the extent that the deferred tax arises from the initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither accounting nor taxable profit or loss, deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probable that taxable surplus will be available against which deductible temporary differences, tax losses and credits can be utilized. However, deferred tax liabilities are not recognized for taxable temporary differences arising on investments in subsidiaries where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. e 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 surplus will be available to allow all or part of the assets to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized. Deferred tax is charged or credited to surplus or deficit, except when it relates to items charged or credited to other comprehensive income or directly to equity, in which case the deferred tax is also dealt with outside surplus or deficit. r. Employee bene ts (i) Short term employee bene ts Salaries, annual bonuses and the cost of non-monetary benefits are accrued in the period in which the associated services are rendered by employees. (ii) Retirement bene ts costs e Group operates two approved defined contribution retirement benefits schemes for employees: a Mandatory Provident Fund ("MPF") Exempted Occupational Retirement Schemes Ordinance registered scheme and a MPF scheme under the Mandatory Provident Fund Schemes Ordinance. e contributions payable to the Group's defined contribution retirement benefits schemes are charged to surplus or deficit as incurred. (iii) Employee leave entitlements Employee entitlements to annual leave are recognized when they accrue to employees. An accrual is made for the estimated liability for annual leave as a result of services rendered by the employees up to the end of the reporting period. s. Related parties A related party is a person or entity that is related to the Group. (i) A person or a close member of that person's family is related to the Group if that person: (a) has control or joint control over the Group; (b) has significant influence over the Group; or (c) is a member of the key management personnel of the Group or of a parent of the Group.