Creative 2014 Annual Report Download - page 33

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33
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
(d) Assessment of the probability of the outcome of current litigation
The Group is subject to certain legal proceedings, lawsuits and other claims. Assessments are made by management on a case-by-
case basis to make a determination as to the impact, if any, on the business, liquidity, results of operations, nancial condition or
cashows. Management believes that the ultimate outcome of the legal proceedings, lawsuits and other claims, individually and
in aggregate will not have a material adverse impact to the Group.
(e) Income taxes
In preparing its nancial statements, the Group estimates its income taxes for each of the jurisdictions in which it operates.
This involves estimating the actual current tax exposure, assessing temporary differences resulting from differing treatment
of items, such as reserves and provisions for tax and accounting purposes, and accounting for uncertainty in income taxes.
These differences result in current and deferred income tax liabilities, which are included within the Group’s consolidated
balance sheet. The Group recognises deferred income tax assets on carried forward tax losses to the extent there are sufcient
estimated future taxable prots and/or taxable temporary differences against which the tax losses can be utilised. The Group’s
income tax liabilities were US$735,000 (2013: US$706,000) and deferred income tax liabilities were US$10,702,000 (2013:
US$15,202,000) at 30 June 2014.
4. EXPENSES BY NATURE
Included in the cost of goods sold, selling, general and administrative and research and development expenses are the
following:
Group
2014 2013
US$’000 US$’000
Depreciaon of property and equipment (Note 17) 697 1,392
Employee compensaon (Note 5) 42,500 49,983
Adversing expenses 4,119 4,658
Rental expenses on operang leases 5,094 10,619
Research and development related expenses 2,305 3,461
Travel, entertainment and transportaon expenses 1,436 1,684
Inventory write-o 4,075 684
Freight charges 5,885 7,404
Legal fees 2,510 1,319