Pentamaster Corporation Berhad
(572307-U)
•
Annual Report 2015
57
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2015 (CONT’D)
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
3.13
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised during the period of time that is necessary to complete and prepare the asset
for its intended use or sale. Capitalisation of borrowing costs commences when the activities to
prepare the asset for its intended use or sale are in progress and the expenditures and borrowing
costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for
their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist
of interest and other costs that the Company incurred in connection with the borrowing of funds.
3.14
Employee Benefits
Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year
in which the associated services are rendered by employees of the Group. Short term accumulating
compensated absences such as paid annual leave are recognised when services are rendered by
employees that increase their entitlement to future compensated absences, and short term non-
accumulating compensated absences such as sick leave are recognised when the absences occur.
Defined contribution plans
As required by law, companies in Malaysia make contributions to the national pension scheme, the
Employees Provident Fund (“EPF”). Such contributions are recognised as an expense as incurred.
3.15
Income Tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised
in profit or loss except to the extent that it relates to a business combination or items recognised
directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to
tax payable in respect of previous years.
Deferred tax is recognised using the liability method, providing for temporary differences between
the carrying amounts of assets and liabilities in the statement of financial position and their tax
bases.
Deferred tax is not recognised for the following temporary differences: the initial recognition
of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured
at the tax rates that are expected to be applied to the temporary differences when they reverse, based
on the laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on
a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be
available against which the temporary difference can be utilised. Deferred tax assets are reviewed at
the end of each reporting period and are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a
tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the
future taxable profits will be available to set-off against the unutilised tax incentive.
