Annual Report 2010 - Leeden Limited

Notes to the Financial Statementsfor the Financial Year ended 31 December 2010Leeden Limited Annual Report 20102. Summary of significant accounting policies (cont’d)2.25 Employee benefits (cont’d)(c)Employee share option plans2.26 Borrowing costsNo expense is recognised for options that do not ultimately vest, except for options where vesting is conditionalupon a market condition or non-vesting condition, which are treated as vested irrespective of whether or not themarket condition is satisfied, provided that all other performance and/or conditions are satisfied, provided that allother performance and/or service conditions are satisfied. In the case where the option does not vest as the resultof a failure to meet a non-vesting condition that is within the control of the Group or the employee, it is accounted foras a cancellation. In such case, the amount of the compensation cost that otherwise would be recognised over theremainder of the vesting period is recognised immediately in profit or loss upon cancellation. The employee shareoption reserve is transferred to retained earnings upon expiry of the options. When the options are exercised, theemployee share option reserve is transferred to share capital if new shares are issued, or to treasury shares if theoptions are satisfied by the reissuance of treasury shares.Borrowing costs are recognised in profit or loss as incurred except to the extent that they are capitalised. Borrowingcosts are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset.Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are inprogress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets aresubstantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur.Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.2.27 Income taxes(a)Current taxCurrent tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxationauthorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantivelyenacted by the balance sheet date, in the countries where the Group operates and generates taxable income.Current taxes are recognised in profit or loss except that the tax relating to items recognised outside profit or loss,either in other comprehensive income or directly in equity. Management periodically evaluates positions takenin the tax returns with respect to situations in which applicable tax regulations are subject to interpretation andestablishes provisions where appropriate.(b)Deferred taxDeferred income tax is provided using the liability method on temporary differences at the balance sheet datebetween the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.Deferred tax liabilities are recognised for all taxable temporary differences, except:• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability ina transaction that is not a business combination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss; and• In respect of taxable temporary differences associated with investments in subsidiary companies andassociated companies, where the timing of the reversal of the temporary differences can be controlled andit is probable that the temporary differences will not reverse in the foreseeable futures.61