Huawei 2015 Annual Report Download - page 64

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(ii) Defined benefit obligations
The Group's obligation in respect of defined
benefit plans is calculated separately for each
plan by estimating the total amount of future
benefit that employees have earned in return
for their service in the current and prior periods
which is then discounted to present value. The
calculation is performed by management using
the projected unit credit method.
Service cost and interest cost on the defined
benefit obligations and any curtailment gains and
losses are recognised in profit or loss.
Remeasurements arising from changes in
assumptions regarding the amounts of future
benefits are recognised immediately in other
comprehensive income and shall not be
reclassified to profit or loss in a subsequent
period.
(o) 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 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 end of
the reporting period, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided on all temporary
differences respectively, representing 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.
Deferred tax assets are recognised to the extent
that it is probable that future taxable profits
will be available against which the asset can be
utilised. 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.
No deferred tax is recognised on:
■ the initial recognition of goodwill;
■ the initial recognition of assets or liabilities
that affect neither accounting nor taxable
profit (provided they are not part of a
business combination); and
■ temporary differences relating to investments
in subsidiaries to the extent that, in the case
of taxable differences, the Group controls
the timing of the reversal and it is probable
that the differences will not reverse in
the foreseeable future, or in the case of
deductible differences, unless it is probable
that they will reverse in the future.
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 end of
the reporting period. Deferred tax assets and
liabilities are not discounted.