LensCrafters 2011 Annual Report Download - page 193

| 117 >CONSOLIDATED FINANCIAL STATEMENTS - NOTES
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 respect of defined benefit pension plans is
the present value of the defined benefit obligation at the end of the reporting period less the
fair value of plan assets, together with adjustments for unrecognized past-service costs. The
defined benefit obligation is calculated annually by independent actuaries using the projected
unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid and that have
terms to maturity approximating the terms of the related pension obligation.
Actuarial gains and losses due to changes in actuarial assumptions or to changes in
the plan’s conditions are recognized as incurred in the consolidated statement of
comprehensive income.
For defined contribution plans, the Group pays contributions to publicly or privately
administered pension insurance plans on a mandatory, contractual or voluntary basis. The