NOTES TO THE FINANCIAL STATEMENTS
FOR THE FInAncIAL yEAR EnDED 30 JunE 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
t)
Employee benefits
Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed
contributions into separate entities such as theCentral Provident Fund, andwill have no legal or constructive
obligation to pay further contributions once the contributions have been paid. Contributions to defined
contribution plans are recognised as an expense in the period in which the related service is performed.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave as a result of services rendered by employees up to the
reporting date.
u)
Borrowing costs
Borrowing costs, which comprise interest and other costs incurred in connection with the borrowing
of funds, are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when
the activities to prepare the asset for its intended use or sale are in progress and the expenditures and
borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed
for their intended use or sale. All other borrowing costs are recognised in profit or loss using the effective
interest method.
v)
Income taxes
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised
in profit or loss except to the extent that it relates to items recognised directly to equity, in which case it
is recognised in equity.
Current tax is the expected tax payable or recoverable on the taxable income for the current year, using
tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or
recoverable in respect of previous years.
Deferred income tax is provided using the liability method, on all temporary differences at the reporting
date arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements except where the deferred income tax arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination, and at the time of the transaction,
affects neither the accounting nor taxable profit or loss.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except
where the timing of the reversal of the temporary difference can be controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the deductible temporary differences can be utilised.
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 currently enacted or substantively enacted tax rates
at the reporting date.
Deferred income tax is charged or credited to equity if the tax relates to items that are credited or charged,
in the same or a different period, directly to equity.
77
ISOTEAM LTD.
ANNUAL REPORT 2016
