2.
Summary of significant accounting policies (cont’d)
2.25 Contingencies
A contingent liability is:
(a)
a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events not wholly within the control of the Group; or
(b)
a present obligation that arises from past events but is not recognised because:
(i)
It is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or
(ii)
The amount of the obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed
in a business combination that are present obligations and which the fair values can be reliably determined.
3.
Significant accounting estimates and judgments
The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent
liabilities at the end of each reporting period.
3.1
Judgments made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those
involving estimations, which have the most significant effect on the amounts recognised in the financial statements:
• Taxes
The Group has exposure to income taxes mainly in Singapore. Significant judgment is involved in determining the
group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues
based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different
from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions
in the period in which such determination is made.
The carrying amount of the Group’s income tax payable, deferred tax liabilities and deferred tax assets as at 31 December
2014 were S$22,196,000 (2013: S$6,023,000), S$3,000 (2013: S$3,000) and S$6,978,000 (2013: S$279,000)
respectively.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
Hock Lian Seng Holdings Limited
Annual report 2014
65
