Creative 2012 Annual Report Download - page 32

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CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
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 asset is recognised to the extent that it is probable that future taxable prot 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 prot or loss.
2.16 Operating leases
Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are classied as operating
leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in prot or
loss 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.
2.17 Employee compensation
Employee benets are recognised as an expense, unless the cost qualies to be capitalised as an asset.
(a) Dened contribution plans
Dened contribution plans are post-employment benet plans under which the Group pays xed contributions into separate
entities such as the Central Provident Fund or Pension on a mandatory, contractual or voluntary basis. The Group has no
further payment obligations once the contributions have been paid.
(b) Share-based compensation
Share options
The share options plan is an equity-settled, share-based compensation plan. The fair value of the employee services
received in exchange for the grant of options is recognised as an expense in prot or loss with a corresponding increase in
share-based compensation reserves over the vesting period. The total amount to be recognised over the vesting period is
determined by reference to the fair value of the options granted on the date of the grant. Non-market vesting conditions
are included in the estimation of the number of shares under options that are expected to become exercisable on the vesting
date. At each balance sheet date, the Group revises its estimates of the number of shares under options that are expected
to become exercisable on the vesting date and recognises the impact of the revision of the estimates in prot or loss, with
a corresponding adjustment to share-based compensation reserves over the remaining vesting period.
When the options are exercised, the proceeds received (net of transaction costs) and the related balance previously recognised
in other reserves are credited to share capital account when new ordinary shares are issued, or to the “treasury shares”
account when treasury shares are re-issued to the employees.
NOTES TO THE FINANCIAL STATEMENTS
For the nancial year ended 30 June 2012
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.15 Income taxes (cont’d)