Asus 2015 Annual Report Download - page 251

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(26) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit
or loss, except to the extent that it relates to items recognized in other comprehensive income or
items recognized directly in equity, in which cases the tax is recognized in other comprehensive
income or equity.
B. The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the end of the financial reporting period in the countries where the
Company and its subsidiaries operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in accordance with applicable
tax regulations. It establishes provisions where appropriate based on the amounts expected to
be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained
earnings and is recorded as income tax expense in the year the shareholders resolve to retain the
earnings.
C. Deferred income tax is recognized, using the balance sheets liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts in
the separate financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of goodwill or of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax is provided on temporary differences arising on investments
in subsidiaries and associates, except where the timing of the reversal of the temporary
difference is controlled by the Company and it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the financial reporting
period and are expected to apply when the related deferred income tax asset is realized or the
deferred income tax liability is settled.
D. Deferred income tax assets are recognized only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilized. At each
end of the financial reporting period, unrecognized and recognized deferred income tax assets
are reassessed.
E. Current income tax assets and liabilities are offset and the net amount is reported in the balance
sheets when there is a legally enforceable right to offset the recognized amounts and there is an
intention to settle on a net basis or realize the asset and settle the liability simultaneously.
Deferred income tax assets and liabilities are offset on the balance sheets when the entity has
the legally enforceable right to offset current tax assets against current tax liabilities and they
are levied by the same taxation authority on either the same entity or different entities that
intend to settle on a net basis or realize the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting
from research and development expenditures to the extent that it is possible that future taxable
profit will be available against which the unused tax credits can be utilized.