UOB Annual Report 2002 - United Overseas Bank

Notes to the Financial Statements
for the financial year ended 31 December 2002
2 Significant Accounting Policies (continued)
(i) Tax
Deferred income tax is determined on the basis of tax effect accounting using the liability method. Deferred income tax is
provided in full on significant temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. Tax rates enacted or substantively enacted by the balance sheet date are used to determine
deferred income tax.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax is provided on significant temporary differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Prior to 1 January 2002, deferred tax was provided on significant timing differences arising from the different treatments in
accounting and taxation of relevant items except where it can be demonstrated with reasonable probability that the tax deferral
would continue for the foreseeable future. In accounting for timing differences, deferred tax assets were not accounted for
unless there was reasonable expectation of their realisation.
The new accounting policy has been adopted to comply with the revised Statement of Accounting Standard (“SAS”) 12 (2001)
Income Taxes and has been applied retrospectively. The comparatives have been restated to conform to the changed policy.
The adjustments made to the comparative figures are as follows:
The Group The Bank
$’000 $’000
Increase in deferred tax assets 29,218 14,033
Decrease in deferred tax liabilities 33,915 28,677
Increase in retained profits 63,133 42,710
(j)
Foreign Currencies
Foreign currency assets and liabilities are translated to Singapore dollars at the rates of exchange ruling at the balance sheet
date. Foreign currency transactions during the year are converted to Singapore dollars at the rates of exchange ruling on the
transaction dates. All exchange differences are taken up in the income statements.
For the purpose of the consolidation of foreign subsidiaries and branches and the equity accounting for associates, the balance
sheets and results are translated into Singapore dollars at the exchange rates prevailing at the balance sheet date. All exchange
adjustments arising on translation into Singapore dollars are taken directly to the foreign currency translation reserve.
102