Investor Presentaiton
MORGAN STANLEY BANK ASIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2020
3.
j.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is calculated based on taxable profit for the year. Taxable profit may differ
from profit/(loss) before income tax as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and it further excludes items that are never
taxable or deductible. Taxable profit is also adjusted if it is considered that it is not probable that a
taxation authority will accept an uncertain tax treatment. The Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the reporting date. Current
tax is charged or credited in the income statement, except when it relates to items charged or credited
directly to other comprehensive income or equity, in which case the current tax is also recorded within
other comprehensive income or equity respectively.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and limited to the extent
that it is probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset is realised, based on the laws that have been enacted or substantively enacted by the
reporting date. Deferred tax is charged or credited in the income statement, except when it relates to items
charged or credited directly to other comprehensive income or equity, in which case the deferred tax is
reflected within other comprehensive income or equity, respectively.
Current tax assets are offset against current tax liabilities when there is a legally enforceable right to set
off current tax assets against current tax liabilities and the Company intends to settle its current tax assets
and current tax liabilities on a net basis or to realise the asset and settle the liability simultaneously.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and current tax liabilities on a net basis.
Provisions and commitments
k.
Provisions are recognised when the Company has an identified present obligation as a result of a past
event, when it is probable that an outflow of resources embodying economic benefits will be required to
settle that obligation and when a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the year end date, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows estimated to settle the present obligation,
its carrying amount reflects the present value of those cash flows, where the effect of discounting is
material.
A commitment is any legal obligation to potentially make or receive cash payments or transfer cash.
Commitments are not recognised in the financial statements. Disclosure is made unless the probability
of settlement is remote.
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