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2.
Summary of significant accounting policies (cont’d.)
2.20Borrowings and borrowing costs (cont’d.)
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there
is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the facility to which it relates.
Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability is reported
within finance cost in the income statements.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least twelve months after the balance sheet date.
2.21 Current and deferred income tax
The tax expense for the period comprises current and deferred income tax. Tax is recognised in profit or loss, except to the extent
that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in
other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Group’s subsidiaries, joint ventures and associates operate and generate taxable
income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities. This liability is measured using the single best estimate of the most likely outcome.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the amounts attributed
to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and
tax laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when
the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, unused tax losses or unused tax credits including unused investment tax allowance can be
utilised.
Deferred tax liability is recognised for all taxable temporary differences associated with investments in subsidiaries, joint
ventures or associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the
reversal of the temporary difference for associates and joint ventures. Only where there is an agreement in place that gives the
Group the ability to control the reversal of the temporary difference, a deferred tax liability is not recognised.
Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation
authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net
basis.
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AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS