Page 47 - SABN AR 2021

Interest-bearing loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. The calculation takes into account any premium or discount on acquisition, and includes transaction costs and fees that are an integral part of the effective interest rate. Gains and losses are recognised in profit or loss when the liabilities are derecognised and through the amortisation process.
1.5 Taxation
The charge for current taxation is based on the results for the financial year and adjusted for items that are disallowed for taxation purposes and prior period tax adjustments. Current taxation is calculated using taxation rates and taxation laws that have been substantially enacted at the date of the statement of financial position. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received. The amount of tax payable or receivable as determined by the revenue authorities might turn out to be different from the amount determined by management.
Deferred taxation is provided using the statement of financial position liability method, based on all temporary differences at the statement of financial position date between the carrying amount of assets and liabilities for financial reporting purposes and their taxation base. The amount of deferred taxation provided is measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities using taxation rates substantially enacted at the date of the statement of financial position.
Deferred taxation assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred taxation assets and liabilities relate to income taxation levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred taxation is charged to the statement of comprehensive income, and the effect of changes in taxation rates is recognised in the statement of comprehensive income. A deferred taxation asset is recognised to the extent that it is probable that future taxable profit will be available against which the unutilised taxation losses and deductible temporary differences can be used. Deferred taxation assets are reviewed at each statement of financial position date and are reduced to the extent that it is no longer probable that the related taxation benefits will be realised.
1.6 Leases
The accounting policy on leases is to be read together with the note on significant judgements and sources of estimation uncertainty, which is applied in accounting for leases.
The Company as a lessor
The Company assesses whether, as at the inception of the contract, a contract is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessor, the Company classifies its leases as either operating or finance leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset, and is classified as an operating lease if it conveys use and operation without the substantial transfer of risks and rewards.
After determining that a contract contains a lease, management assesses whether the lease is a finance lease. This is done by applying judgement in considering the substance of the lease agreement and whether it transfers substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease term in relation to the economic life of the asset, the present value of minimum lease payments in relation to the asset’s fair value, and whether the lessee obtains ownership of the asset at the end of the lease term.
South African Bank Note Company (RF) Proprietary Limited
Annual Report 2021
47