Axiom 2014 Annual Report - page 95

Notes to the Financial Statements
for the year ended 30 September 2014
93
2014 Annual Report
4. Summary of significant accounting
policies (continued)
Recognition of impairment losses
An impairment loss is recognised in profit or loss
whenever the carrying amount of an asset, or the
cash-generating unit to which it belongs, exceeds its
recoverable amount. Impairment losses recognised in
respect of cash-generating units are allocated to reduce
the carrying amount of assets in the unit (or Group of
units) on a pro rata basis, except that the carrying value
of an asset will not be reduced below its individual fair
value less costs to sell, or value in use, if determinable.
Reversal of impairment losses
An impairment loss is reversed if there has been a
favorable change in the estimates used to determine
the recoverable amount.
A reversal of an impairment loss is limited to the asset’s
carrying amount that would have been determined
had no impairment loss been recognised in prior years.
Reversals of impairment losses are credited to profit or
loss in the year in which the reversals are recognised.
Income tax
The income tax expense/(benefit) for the year comprises
current income tax expense/(benefit) and deferred tax
expense/(benefit).
Current income tax expense charged to profit or loss is
the tax payable on taxable income. Current tax liabilities/
(assets) are measured at the amounts expected to be paid
to/(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in
deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense/(benefit) is
charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax
is recognised from the initial recognition of an asset or
liability, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled and
their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability. With respect to
non-depreciable items of property, plant and equipment
measured at fair value and items of investment property
measured at fair value, the related deferred tax liability
or deferred tax asset is measured on the basis that the
carrying amount of the asset will be recovered entirely
through sale.
Deferred tax assets relating to temporary differences
and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be
available against which the benefits of the deferred tax
asset can be utilised.
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates, and
joint ventures, deferred tax assets and liabilities are
not recognised where the timing of the reversal of the
temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where
a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will
occur. Deferred tax assets and liabilities are offset where:
(a) a legally enforceable right of set-off exists; and (b) the
deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same
taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will
occur in future periods in which significant amounts
of deferred tax assets or liabilities are expected to be
recovered or settled.
Other receivables
Other receivables are initially recognised at fair value
and thereafter stated at amortised cost less allowance
for impairment of doubtful debts, except where the
receivables are interest-free loans made to related
parties without any fixed repayment terms or the effect
of discounting would be immaterial. In such cases,
the receivables are stated at cost less allowance for
impairment of doubtful debts.
Other payables
Other payables are initially recognised at fair value and
are subsequently stated at amortised cost unless the
effect of discounting would be immaterial, in which case
they are stated at cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on
hand, demand deposits with banks and other financial
institutions, and short-term, highly liquid investments
that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes
in value, having been within three months of maturity
at acquisition. Bank overdrafts that are repayable on
demand and form an integral part of the Company’s
cash management are also included as a component of
cash and cash equivalents for the purpose of the cash
flow statement.
COMPANY FINANCIAL REPORT
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