Page 101 - HRC_AR2020

HENGYUAN REFINING COMPANY BERHAD I 99

2 sUMMarY of siGnificant accoUntinG policies (continued)
2.21 cUrrent anD DeferreD incoMe taX (continued)
Deferred tax assets and liabilities are recognised on temporary differences arising between the amounts attributed to
assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using
tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets including tax benefits from reinvestment allowance are recognised for all deductible temporary
differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences and the carry forward of unused tax credits
and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it
has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred and income tax 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 income tax assets and liabilities relate to taxes levied
by the same taxation authority on the taxable entity.

2.22 sHare capital
(a) classification
An equity instrument is any contract that evidence a residual interest in the assets of the Company, after
deducting all of its liabilities. Ordinary shares are classified as equity. Ordinary shares are recorded at the proceeds
received, net of directly attributable incremental transaction costs.
(b) Dividend distribution
Dividend distribution to owners of the Company is debited directly to equity. The corresponding liability is
recognised in the period in which the dividends are approved.
2.23 earninGs per sHare
Basic earnings per share

Basic earnings per share is calculated by dividing:
– the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares;
and
– by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in the ordinary shares issued during the year and excluding treasury shares.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares,
and the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.