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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Income Taxes (Cont’d)
Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill
or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities over the business combination costs or 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 profit nor taxable profit.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits
to the extent that it is probable that future taxable profits will be available against which the deductible temporary
differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are
reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future
taxable profits will be available to allow all or part of the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset
is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end
of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.
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 transactions either in other comprehensive income or directly in equity
and deferred tax arising from a business combination is adjusted against goodwill or excess of the acquirer’s interest in
the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination
costs.
Government Grants
Grants from the government are recognised initially as deferred income at their fair value where there is a reasonable
assurance that the grant will be received and the Group will comply with all attached conditions.
Grants that compensate the Group for expenses incurred are recognised in profit or loss over the periods necessary to
match the grants with the related expenses which they are intended to compensate for. These grants are presented as
other income in profit or loss or a deduction in reporting the related expenses in profit or loss.
Borrowing Costs
Borrowing costs, directly attributable to the acquisition, construction or production of a qualifying asset are capitalised
as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. The capitalisation
of borrowing costs is suspended during extended periods in which active development is interrupted.
All other borrowing costs are recognised in profit or loss as expenses in the period in which they incurred.
Contract Customers
When the outcome of a contract can be estimated reliably, revenue and costs are recognised by reference to the stage
of completion of the contract activity at the end of the reporting period, measured based on the proportion that contract
costs incurred for work performed to date bear to the estimated total contract costs except where this would not be
representative of the stage of completion. Variations in contract work, claims and incentive payments are included to
the extent that they have been agreed with the customer.
When the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract
costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which
they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.
NOTES TO THE FINANCIAL STATEMENTS
(cont’d)