46
SUNMOON FOOD COMPANY LIMITED
ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
2.8
Taxes
Income tax expense
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current income tax
The tax currently payable is based on taxable profit for the financial year. Taxable profit differs from profit
as reported in profit or loss because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for
current tax is recognised at the amount expected to be paid or recovered from the taxation authorities and
is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries
where the Company and its subsidiaries operate by the end of the financial year.
Current income tax is recognised in profit or loss, except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or directly in equity.
Deferred tax
Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries
and associates, and interests in joint ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary differences associated with such investments
and interests are only recognised to the extent that is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each financial year and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset 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 realised based on the tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the financial year.
