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Straco Corporation Limited • Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
3
Significant accounting policies (cont’d)
3.11 Finance income and finance costs
Finance income comprises interest income on bank balances. Interest income is recognised as it accrues, using the effective interest method. Finance
income is included in other income.
Finance costs comprise interest expenses on loans and borrowings.
Foreign currency gains or losses are reported on a net basis in administrative expenses.
3.12 Government grants
Government grants are recognised at their fair value when there is reasonable assurance that the Group complies with the conditions attached to
them, and the grant will be received. The grant is presented separately in profit or loss.
Income related grants are credited to profit or loss over the periods necessary to match them with related expenditure.
Asset-related grants are accounted for as deferred income and recognised in profit or loss on a systematic and rational basis over the useful lives of the assets.
3.13 Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised for:
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss;
•
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not
reverse in the foreseeable future; and
•
taxable temporary differences arising on the initial recognition of goodwill.
The measurement of deferred taxes reflects the tax consequences that would follow the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
