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LIPPO MALLS INDONESIA RETAIL TRUST ANNUAL REPORT 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Income tax
The income taxes are accounted for using the asset and liability method that requires the recognition of taxes payable
or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events
that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax
liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future
changes in tax laws or rates are not anticipated. Tax expense (tax income) is the aggregate amount included in the
determination of profit or loss for the reporting year in respect of current tax and deferred tax. Income tax expense
represents the sum of the tax currently payable and deferred tax. Current and deferred income taxes are recognised
as income or as an expense in profit or loss unless the tax relates to items that are recognised in the same or a
different period outside profit or loss. For such items recognised outside profit or loss the current tax and deferred tax
are recognised (a) in other comprehensive income if the tax is related to an item recognised in other comprehensive
income and (b) directly in unitholders’ funds if the tax is related to an item recognised directly in unitholders’ funds.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority.
The carrying amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if necessary,
by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax
amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition
of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction,
affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for all taxable
temporary differences associated with investments in subsidiaries except where the reporting entity is able to control
the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary difference
will not be reversed in the foreseeable future or for deductible temporary differences, they will not be reversed in the
foreseeable future and they cannot be utilised against taxable profits.
Foreign currency transactions
The functional currency of the Trust is the Singapore dollar as it reflects the primary economic environment in which
the entity operates. Transactions in foreign currencies are recorded in Singapore dollars at the rates ruling at the dates
of the transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair
value that are denominated in non-functional currencies are reported at the rates ruling at the end of the reporting
year and fair value dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with
in the profit or loss except when recognised in other comprehensive return and if applicable deferred in equity as
qualifying cash flow hedges. The presentation is in the functional currency.
Translation of financial statements of other entities
Each entity in the Group determines the appropriate functional currency as it reflects the primary economic environment
in which the entity operates. In translating the financial statements of such an entity for incorporation in the consolidated
financial statements in the presentation currency the assets and liabilities denominated in currencies other than the
functional currency of the Group are translated at end of the reporting year rates of exchange and the income and
expense items are translated at average rates of exchange for the reporting year. The resulting translation adjustments
(if any) are recognised in other comprehensive return and accumulated in a separate component of unitholders’ funds
until the disposal of that relevant reporting entity.
Segment reporting
Reportable segments are operating segments or aggregations of operating segments that meet specified criteria.
Operating segments are components about which separate financial information is available that is evaluated regularly
by the chief operating decision maker in deciding how to allocate resources and in assessing the performance. Segment
information has not been presented as all of the Group’s investment properties are used primarily for retail purposes
and are all located in Indonesia. They are regarded as one component by the chief operating decision maker.
Notes to the Financial Statements
(Cont’d)
31 December 2014
