LensCrafters 2010 Annual Report Download - page 132

ANNUAL REPORT 2010> 130 |
Long–term debt
Long–term debt is initially recorded at fair value, less directly attributable transaction costs, and subsequently measured
at its amortized cost by applying the effective interest method. If there is a change in expected cash flows, the carrying
amount of the long–term debt is recalculated by computing the present value of estimated future cash flows at the
financial instrument’s original effective interest rate. Long–term debt is classified under non–current liabilities when the
Group retains the unconditional right to defer the payment for at least 12 months after the balance sheet date under
current liabilities when payment is due within 12 months from the balance sheet date.
Long–term debt is removed from the statement of financial position when it is extinguished, i.e. when the obligation
specified in the contract is discharged, canceled or expires.
Current and deferred taxes
The tax expense for the period comprises current and deferred tax.
Tax expenses is recognized in the consolidated statement of income, except to the extent that it relates to items
recognized in other comprehensive income or directly in equity. In this case, tax is also recognized in other comprehensive
income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted
or substantially enacted at the balance sheet date in the countries where the Group operates and generates taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they
arise from the initial recognition of goodwill. Deferred income tax is not accounted for if it arises from initial recognition
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 determined using tax rates (and laws) that have been enacted
or substantially enacted as of the balance sheet date and are expected to apply when the related deferred income
tax asset is realized or the deferred income tax liability is settled. 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. Deferred income tax is recognized on temporary differences arising on investments in subsidiaries and associates,
except for deferred income tax liabilities 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 assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances
on a net basis.
Employee benefits
The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The
Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to
pay all employees the benefits relating to employee service in the current and prior periods.
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an
amount of pension benefit that an employee will receive upon retirement, usually dependent on one or more factors such
as age, years of service and compensation. The liability recognized in the consolidated statement of financial position in