Notes to The
Financial Statements
Year ended 31 December 2015
3 Significant accounting policies (Cont’d)
3.7 Expenses
(i)
Property expenses
Property expenses are recognised on an accrual basis. Where the Group has the use of assets under
operating leases, payments made under the leases are recognised in the Statement of Total Return on a
straight-line basis over the term of leases.
(ii)
Management fees
Management fees comprise of the Manager’s base fees, performance fees and asset management fees
payable to the asset managers of the Japan properties.
Manager’s base fees and performance fees are recognised on an accrual basis based on the applicable
formula stipulated in Note 1(B). Where applicable, Manager’s base fee and performance fee paid and
payable in units are recognised as an expense in the Statement of Total Return with a corresponding
increase in Unitholders’ funds.
(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.
106
ParkwayLife REIT
Annual Report 2015
