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Deferred taxation 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. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the statement of financial position
date. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred taxation is charged to the statement of profit
or loss except to the extent that it relates to a transaction that is recognised directly in equity, or a business combination that is an acquisition.
The effects on deferred taxation of any changes in tax rates is recognised in the statement of profit or loss, except to the extent that it relates to
items previously charged or credited directly to equity.
A deferred taxation asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated
unused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
1.17 Associates
An associate is a company over which the group has significant influence, but not control. Significant influence is the power to participate in the
financial and operating policy decisions of a company but is not control over those policies.
The equity method of accounting for associates is adopted in the group financial statements. In applying the equity method, account is taken
of the group’s share of accumulated retained earnings and movements in reserves from the effective dates on which the companies became
associates and up to the effective dates of disposal. In the event of associates making losses, the group recognises the losses to the extent of
the group’s exposure. The group carries its investment in associates at cost less any accumulated impairment losses.
1.18 Foreign operations
Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated into South
African rand at rates of exchange ruling at the reporting date. Income, expenditure and cash flow items are translated into South African rand
at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on translation
are recognised directly in equity as a foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant
amount in the foreign currency translation reserve is transferred to the statement of profit or loss.
Foreign exchange differences arising on translation are recognised directly in a separate component of equity.
Acquisitions and disposals of foreign operations are accounted for at the exchange rate ruling on the date of the transaction.
1.19 Financial instruments
Financial instruments are recognised when the group or company becomes party to the contractual provisions of the arrangement.
Financial instruments are initially measured at fair value plus, for instruments not carried at fair value through profit or loss, any directly
attributable transaction costs.
An instrument is classified as at fair value through profit or loss if it is held-for-trading, is a derivative or is designated as such upon initial
recognition.
A financial asset is classified as held-for-trading if it has been acquired principally for the purpose of selling in the near future or it has been part
of an identified portfolio of financial instruments that the group manages together and has a recent actual pattern of short-term profit-making.
Financial instruments at fair value through profit or loss are measured at fair value, with any resultant gain or loss being recognised in the
statement of profit or loss. The gain or loss recognised in the statement of profit or loss excludes the interest and dividends earned on the
financial asset, which are separately disclosed as such in the statement of profit or loss. Held-for-trading financial instruments are measured at
amortised cost if the fair value cannot be determined.
Bidcorp Limited Annual integrated report 2016 |
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Financial overview