17. DEFERRED INCOME TAXES   Close Window

(All amounts in Sri Lanka Rupees millions) Deferred income taxes are calculated on all temporary differences under the liability method using a principal tax rate of 30% (2002 - 35%). The movement in the deferred income tax account is as follows:   Group Company   2003 2002 2003 2002 At beginning of year         - as previously reported 7,146 (5,225) 7,146 (5,225) - prior year adjustment – 9,849 – 9,849 - as restated --------- 7,146 --------- 4,624 --------- 7,146 --------- 4,624 Income Statement charge (Note 6) 993 2,522 993 2,522 At end of year --------- 8,139 ====== --------- 7,146 ====== --------- 8,139 ====== --------- 7,146 ====== The prior year adjustment represents a reversal of deferred tax assets arising on Investment Tax Allowances which had been previously recognised in the Balance Sheet, having been reversed due to the Government policy change, which resulted in the final year for unabsorbed Investment Tax Allowance being up to 2004/2005. The prior year adjustment, though a departure from Sri Lanka Accounting Standard SLAS 10 - Net Profit or Loss for the period, Fundamental Errors and Changes in Accounting Policies, has been adopted in accordance with the provisions of SLAS 3 - Presentation of Financial Statements. Reversal of the entire amount of deferred tax asset in the current year will lead to a net loss of Rs. 7,466,000,000 which would be misleading and therefore the departure from the requirement of SLAS 10 becomes necessary to achieve a fair presentation as permitted by SLAS 3 - Presentation of Financial Statements. Therefore a prior year adjustment was considered necessary to achieve a fair presentation. The amounts shown in the Balance Sheet represent the following:   Group Company   2003 2002 2003 2002 Deferred tax asset (2,332) (4,424) (2,332) (4,424) Deferred tax liability 10,471 11,570 10,471 11,570   --------- 8,139 ====== --------- 7,146 ====== --------- 8,139 ====== --------- 7,146 ======

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