Huawei 2011 Annual Report Download - page 48

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benets will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a
contingent liability, unless the probability of outow
of economic benets is remote. Possible obligations,
whose existence will only be confirmed by the
occurrence or non-occurrence of one or more future
events are also disclosed as contingent liabilities
unless the probability of outflow of economic
benets is remote.
(t) Income tax
Income tax for the year comprises current tax
and movements in deferred tax assets and
liabilities. Current tax and movements in deferred
tax assets and liabilities are recognised in profit
or loss except to the extent that they relate to
a business combination or items recognised in
other comprehensive income or directly in equity,
in which case the relevant amounts of tax are
recognised in other comprehensive income or
directly in equity, respectively.
Current tax is the expected tax payable on the
taxable income for the year, using tax rates
enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax assets and liabilities arise from
deductible and taxable temporary differences
respectively, being the differences between the
carrying amounts of assets and liabilities for
financial reporting purposes and their tax bases.
Deferred tax assets also arise from unused tax
losses and unused tax credits.
All deferred tax liabilities, and all deferred tax
assets to the extent that it is probable that future
taxable profits will be available against which
the asset can be utilised, are recognised. Future
taxable profits that may support the recognition
of deferred tax assets arising from deductible
temporary differences include those that will arise
from the reversal of existing taxable temporary
differences, provided those differences relate
to the same taxation authority and the same
taxable entity, and are expected to reverse either
in the same period as the expected reversal of the
deductible temporary difference or in periods into
which a tax loss arising from the deferred tax asset
can be carried back or forward. The same criteria are
adopted when determining whether existing taxable
temporary differences support the recognition of
deferred tax assets arising from unused tax losses
and credits, that is, those differences are taken into
account if they relate to the same taxation authority
and the same taxable entity, and are expected to
reverse in a period, or periods, in which the tax loss
or credit can be utilised.
The amount of deferred tax recognised is measured
based on the expected manner of realisation or
settlement of the carrying amount of the assets and
liabilities, using tax rates enacted or substantively
enacted at the balance sheet date. Deferred tax
assets and liabilities are not discounted.
The carrying amount of a deferred tax asset is
reviewed at each balance sheet date and is reduced
to the extent that it is no longer probable that
sufcient taxable prots will be available to allow the
related tax benet to be utilised. Any such reduction
is reversed to the extent that it becomes probable
that sufcient taxable prots will be available.
Current tax balances and deferred tax balances,
and movements therein, are presented separately
from each other and are not offset. Current tax
assets are offset against current tax liabilities, and
deferred tax assets against deferred tax liabilities, if
the Group has the legally enforceable right to set
off current tax assets against current tax liabilities
and the following additional conditions are met:
■ in the case of current tax assets and liabilities,
the Group intends either to settle on a net basis,
or to realise the asset and settle the liability
simultaneously; or
■ in the case of deferred tax assets and liabilities,
if they relate to income taxes levied by the same
taxation authority on either:
■ the same taxable entity; or
■ different taxable entities, which, in each future
period in which signicant amounts of deferred
tax liabilities or assets are expected to be settled
or recovered, intend to realise the current tax
assets and settle the current tax liabilities on a
net basis or realise and settle simultaneously.
Consolidated Financial Statements Summary and Notes