Creative 2009 Annual Report Download - page 27

27
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES
Group. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, the Group has
delivered the products to the customers, the customers have accepted the products, significant risks and rewards of ownership
have been transferred and when it is probable that the collectability of the related receivables is reasonably assured.
Allowances are provided for estimated returns and discounts based on historical experience, current economic trends and
changes in customer demand and acceptance of its products. Such allowances are adjusted periodically to reflect actual
and anticipated experience. When recognising revenue, the Group records estimated reductions to revenue for customer
and distributor programs and incentive offerings, including price protection, promotions, other volume-based incentives and
rebates.
2.15 Research and development costs
As the Group cannot definitively distinguish the research phase from the development phase of its internal projects to create
intangible assets, the Group treats the expenditure on its internal projects as if they were incurred in the research phase only.
Accordingly, all research and development costs are recognised as an expense when incurred.
2.16 Income taxes
Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the
tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition
of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor
taxable profit or loss at the time of the transaction.
A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated
companies, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future.
A deferred income tax is recognised to the extent that it is probable that future taxable profit will be available against which
the deductible temporary differences and tax losses can be utilised.
Deferred income tax is measured:
(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance
sheet date; and
(ii) based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date,
to recover or settle the carrying amounts of its assets and liabilities.
Current and deferred income taxes are recognised as income or expense in the income statement.
2.17 Operating leases
Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in the income
statement on a straight-line basis over the period of the lease. When a lease is terminated before the lease period expires,
any payment made (or received) by the Group as penalty is recognised as an expense (or income) when termination takes
place.
AR09 pg1-64_Final.indd 27 10/2/2009 10:38:08 AM