84
GHL Systems Berhad
(293040-D)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.13 Income taxes (continued)
(b) Deferred tax (continued)
Deferred tax is recognised for all temporary differences, unless the deferred tax arises from
goodwill or the initial recognition of an asset or liability in a transaction which is not a business
combination and at the time of transaction, affects neither accounting profit nor taxable profit.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits
would be available against which the deductible temporary differences, unused tax losses and
unused tax credits can be utilised. The carrying amount of a deferred tax asset is reviewed at the
end of each reporting period. If it is no longer probable that sufficient taxable profit would be
available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying
amount of the deferred tax asset would be reduced accordingly. When it becomes probable
that sufficient taxable profits would be available, such reductions would be reversed to the
extent of the taxable profits.
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 income taxes relate to the
same taxation authority on either:
(i) the same taxable entity; or
(ii) different taxable entities which intend either to settle current tax liabilities and assets on
a net basis, or to realise the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are expected to be
settled or recovered.
Deferred tax would be recognised as income or expense and included in the profit or loss for
the period unless the tax relates to items that are credited or charged, in the same or a different
period, directly to equity, in which case the deferred tax would be charged or credited directly
to equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on the announcement of tax
rates and tax laws by the Government in the annual budgets which have the substantive effect
of actual enactment by the end of each reporting period.
4.14 Provisions
Provisions are recognised when there is a present obligation, legal or constructive, as a result of a
past event, when it is probable that an outflow of resources embodying economic benefits would
be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
If the effect of the time value of money is material, the amount of a provision would be discounted to
its present value at a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best
estimate. If it is no longer probable that an outflow of resources embodying economic benefits would
be required to settle the obligation, the provision would be reversed.
