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51
APN
annual report
2011
notes to the financial statements
APN News & Media Limited and Controlled Entities
On consolidation, exchange differences arising from the translation
of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments
are recognised in other comprehensive income. When a foreign
operation is sold or a partial disposal occurs, a proportionate share
of such exchange differences is recognised in the income statement
as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
(e) Revenue recognition
Revenue is measured at the fair value of consideration received or
receivable. Amounts disclosed as revenue are net of commissions,
returns, rebates and taxes paid. The Group recognises revenue
when the amount of revenue can be reliably measured and it is
probable that the economic benefits will flow to the Group.
Advertising revenue from Publishing is recognised when a
newspaper or magazine is published, from Broadcasting when the
advertisement is broadcast and from Outdoor and Online operations
over the period when displayed.
Circulation, printing and coupon revenue is recognised when control
of the goods passes to the buyer.
Other income includes rental income and dividends. These items
are recognised when the services have been provided or the Group’s
right to receive payment has been established.
(f) Income tax
The income tax expense for the year is the tax payable on the
current year’s taxable income based on the applicable income tax
rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences between the
tax bases of assets and liabilities and their carrying amounts in the
financial statements and also adjusted for unused tax losses utilised
in the year.
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 Company’s subsidiaries 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.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those enacted tax rates
applicable to each jurisdiction. The relevant tax rates are applied
to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to
control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the foreseeable
future. Temporary differences in relation to indefinite life intangible
assets are determined with reference to their respective capital gains
tax bases in respect of assets for which capital gains tax will apply.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts
recognised in other comprehensive income are also recognised
in other comprehensive income.
(g) Leases
A distinction is made between finance leases, which effectively
transfer from the lessor to the lessee substantially all the risks and
benefits incidental to ownership of leased non-current assets,
and operating leases under which the lessor effectively retains
substantially all such risks and benefits.
Assets acquired under finance leases are included as property, plant
and equipment in the balance sheet. Finance leases are capitalised
at the lease’s inception at the lower of the fair value of the leased
property and the present value of the minimum lease payments.
A corresponding liability is also established and each lease payment
is allocated between the liability and finance charges. The interest
element is charged to profit or loss over the period of the lease.
Leased assets are amortised on a straight line basis over the term
of the lease, or where it is likely that the consolidated entity will
obtain ownership of the asset, the life of the asset. Leased assets
held at balance date are amortised over periods ranging from one
to five years.
Other leases under which all the risks and benefits of ownership
are effectively retained by the lessor are classified as operating
leases. Operating lease payments, excluding contingent payments,
are charged to profit or loss on a straight line basis over the period
of the lease.
(h) Business combinations
The acquisition method of accounting is used to account for all
business combinations regardless of whether equity instruments
or other assets are acquired. The consideration transferred for
the acquisition of a subsidiary comprises the fair values of the
assets transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred also includes
the fair value of any contingent consideration arrangement and
the fair value of any pre-existing equity interest in the subsidiary.
Contingent consideration is classified either as equity or a financial
liability. Amounts classified as a financial liability are subsequently
remeasured to fair value through profit or loss. Acquisition related
costs are expensed as incurred.
The identifiable assets acquired and liabilities and contingent
liabilities assumed are measured initially at their fair values at
the acquisition date. Non-controlling interests in an acquiree are
recognised either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets. This decision is
made on an acquisition-by-acquisition basis.