39 l BRADKEN LIMITED ANNUAL REPORT 2014
Notes to the consolidated financial statements
30 June 2014
(continued)
2 Summary of significant accounting policies (continued)
(iii) Interest income
(iv) Sale of non-current assets
(v) Royalties
(vi) Dividends
(f) Income tax
(i)
Investment allowances
Interest income is recognised as it accrues, taking into account the effective yield on the financial asset.
Where the outcome of a contract cannot be reliably estimated, contract costs are expensed as incurred. Where it is probable
that the cost will be recovered, revenue is recognised to the extent of costs incurred. Where it is probable that a loss will arise
on a contract, the excess of total costs over revenue is recognised immediately as an expense.
Dividends are recognised as revenue when the right to receive payment is established. This applies even if they are paid out of
pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence, refer note 2(m).
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
The gain or loss on disposal of non-current assets is included as other income or expense at the date control passes to the
buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference
between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Bradken Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in
the consolidated financial statements.
Companies within the group may be entitled to claim special tax deductions for investments in qualifying assets (investment
allowances). The group accounts for such allowances as tax credits, which means that the allowance reduces income tax
payable and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as
deferred tax assets.
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is
not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply
when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
Page 39
Bradken Limited
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
1...,66,67,68,69,70,71,72,73,74,75 77,78,79,80,81,82,83,84,85,86,...136