2. Significant accounting policies (CONT’D.)
2.5 Summary of significant accounting policies (cont’d.)
(n) Income tax (cont’d.)
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss.
Deferred tax items are recognised in correlation to the underlying transaction either in other
comprehensive income or directly in equity and deferred tax arising from a business combination is
adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes related to the same taxable
entity and the same taxation authority.
(o) Employee benefits
(i) Short term benefits
Short term benefits such as wages, salaries, bonuses and social security contributions are
recognised as an expense in the year in which the associated services are rendered by employees
of the Group and the Company. Short term accumulating compensated absences such as paid
annual leave are recognised when services are rendered by employees that increase their
entitlement to future compensated absences. Short term non-accumulating compensated
absences such as sick leave are recognised when the absences occur.
(ii) Defined contribution plans
As required by law, the Group and the Company make contributions to the Employee Provident
Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution
pension schemes are recognised as an expense in the period in which the related service is
performed.
(iii) Defined benefit plans
The Group and the Company also pay defined benefits to the estates workers and staff in
Peninsular Malaysia in accordance with agreement between the Malayan Agricultural Producers
Association (MAPA) and the National Union of Plantation Workers (NUPW) as well as between
MAPA and All Malayan Estates Staff Union (AMESU). These gratuity benefits are calculated based
on the specified rates for each completed year of service.
The defined benefit liability is the aggregate of the present value of the defined benefit obligations
(derived using a discount rate based on market yield at the valuation date on high quality
corporate bonds for a duration of 10 years) adjusted for actuarial gains or losses and past service
costs. There are no assets which qualify as plan assets as this is an unfunded arrangement.
The cost of providing benefits under the defined benefit plans is determined separately for each
plan using the projected unit credit method taking into account various factors which includes
mortality and disability rates, turnover rates, future salary increases and estimated future cash
outflows.
Defined benefit costs comprise service costs, net interest on the net defined benefit liability and
remeasurements of net defined benefit liability or asset.
n otes to th e f i nan c i a l statements
Bo ustead plantati o ns Berhad
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