Page 37 - GROUP 3 NAKED HOTEL LIMITED ANNUAL REPORT

Depreciation charge:
2016 2015
$’000 $’000
Buildings 1,803 1,803
Furniture and fittings 2,227 2,227
Equipment 2,997 2,970

All property, plant and equipment are initially recorded at cost. All property, plant, and
equipment subsequently stated at cost less accumulated depreciation except for land, which
stated at historical cost.

Gains and losses on disposal of property, plant and equipment are determined by reference to their
carrying amount and are taken into account in determining operating profit.

d) Taxation
Taxation on the profit or loss for the year comprises current and deferred taxation. Taxation is
recognized in the Income Statement, except to the extent that it relates to items recognized directly
to equity, in which case it is recognized in equity.

Current taxation charges are based on taxable profits for the year, using taxation rates enacted at
the Balance Sheet date, and any adjustment for prior years and taxation losses in respect of
previous years. Taxable profits differ from profit before taxation reported because it excludes items
that are taxable or deductible in other years, and items that are never taxable or deductible.

Deferred taxation is computed using the Balance Sheet Liability Method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The amount of deferred taxation provided is based on
the expected manner of realization or settlement of the carrying amount of assets and liabilities,
using taxation rates enacted at the Balance Sheet date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits
will be available against which the asset can be utilized. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.

e) Foreign currency transaction
Assets and liabilities denominated in foreign currencies are translated into Jamaican dollars at the
exchange rates prevailing at the Balance Sheet date.

Transactions in foreign currencies are translated at the rates of exchange ruling at the date of those
transactions.
f) Accounts Receivable
Trade and other receivables are stated at cost less impairment losses.

g) Accounts Payable
Trade and other payables are stated at cost.

Page | 37