Eng - IOI Group

45 CHANGES IN ACCOUNTING POLICES AND PRIOR YEAR ADJUSTMENTS45.1 Deferred taxationDuring the financial year, the Group changed its accounting policy in respect of the provision of deferredtaxation in compliance with the new MASB 25, Income Taxes. Prior to the adoption of MASB 25, deferredtaxation was provided for on partial provision basis for timing differences using the income statementliability method in accordance with IAS 12, Accounting for Taxes on Income. With the adoption of MASB 25,deferred tax is now provided for in full using balance sheet liability method on temporary differences arisingfrom tax bases of assets and liabilities and their carrying amounts.The change in accounting policy, applied retrospectively, has the following impact on results as follows:In RM’000GroupCompany2003 2002 2003 2002Net profit before changein accounting policy 526,671 350,960 148,381 163,170Effect of adopting MASB 25 (Note 9) (24,619) (4,459) - -Net profit for the year 502,052 346,501 148,381 163,17045.2 Recognition of gains or losses arising from deemed disposalsGains or losses arising from deemed disposals upon issuance of new shares by subsidiaries to minorityshareholders were previously deferred in capital reserve and to be realised in income statement when theGroup’s investments in subsidiaries are disposed. These gains or losses are now recognised in the incomestatement upon occurrence of deemed disposal provided that new shares are issued to minority shareholdersfor cash consideration and the issue prices have been established at fair value.The change in accounting policy will result in a more appropriate presentation of the transactions in thefinancial statements and has been applied retrospectively. Except for the reclassification of RM34,003,000 ofopening balance of capital reserve to retained profits, the change in accounting policy does not affect theresult of the Group for the current financial year or other components of the financial statements.225IOI Corporation BerhadAnnual Report 2003