NOTES TO THE
FINANCIAL STATEMENTS
Year ended 31 December 2014
3
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.7 Expenses (cont’d)
(iii)
Trust expenses
Trust expenses are recognised on an accrual basis. Included in trust expenses is the trustee’s fees which
are based on the applicable formula stipulated in Note 1(A).
(iv)
Finance costs
Finance costs comprise interest expense on borrowings, amortisation of borrowings related transactions
costs and settlement on financial derivatives.
Interest expense and similar charges are recognised in the Statement of Total Return, using the effective
interest rate method over the period of borrowings. Expenses incurred in connection with the arrangement
of borrowings are recognised in the Statement of Total Return using the effective interest method over the
period for which the borrowings are granted.
3.8 Income tax expense
Income tax expense comprises current and deferred tax. Income tax is recognised in the Statement of Total Return
except to the extent that it relates to items directly related to Unitholders’ funds, in which case it is recognised in
the Unitholders’ funds.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the
following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments
in subsidiaries to the extent that the Group is able to control the timing of the reversal of the temporary difference
and it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for
taxable temporary differences arising on the initial recognition of goodwill.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group
expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For
investment property that is measured at fair value, the presumption that the carrying amount of the investment will
be recovered through sale has not been rebutted. Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on the laws that have been enacted or substantively
enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities
will be realised simultaneously.
112
PA R K WAY L I F E R E I T
