143
AirAsia X Berhad • Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2014
13 DEFERRED TAXATION (CONTINUED)
Group
Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
Deferred tax assets (before offsetting)
- Tax incentives
251,456
284,290
251,456
284,290
- Tax losses
59,263
16,598
59,263
16,598
- Property, plant and equipment
102,766
59,371
102,766
59,371
- Derivatives
31,414
-
31,414
-
- Others
894
360
894
360
445,793
360,619
445,793
360,619
Offsetting
-
(989)
-
(989)
Deferred tax assets (after offsetting)
445,793
359,630
445,793
359,630
Deferred tax liability (before offsetting)
- Unrealised foreign exchange differences
-
989
-
989
Offsetting
-
(989)
-
(989)
Deferred tax liability (after offsetting)
-
-
-
-
Deferred tax assets are mainly originating from unutilised tax incentives, unabsorbed capital allowances and tax losses carry forward which have no expiry dates. As disclosed
in Note 3 to the financial statements in respect of critical accounting estimates and judgments, the deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which temporary differences can be utilised. Estimating the future taxable profits involves significant assumptions, especially
in respect of regulatory approvals for prospective routes, aircraft delivery, fares, load factors, fuel price, maintenance cost and currency movements. These assumptions have
been built based on past performance and adjusted for non-recurring circumstances and a reasonable growth rate. Based on these projections, management believes that the
current non-time restricted temporary differences will be utilised and has recognised the deferred tax assets as at end of the reporting date.
The Ministry of Finance has granted approval to the Company under Section 127 of Income Tax Act, 1967 for income tax exemption in the form of an Investment Allowance
(“IA”) of 50% on qualifying expenditure incurred within a period of 5 years commencing 1 September 2014 to 31 August 2019, to be set off against 50% of the statutory income
for each year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised. The amount of income exempted from tax is credited to
a tax-exempt account from which tax-exempt dividends can be declared.
14 DEPOSITS ON AIRCRAFT PURCHASES
The deposits on aircraft purchases are denominated in US Dollar and are in respect of pre-delivery payments on aircraft purchases. Pre-delivery payments constitute instal-
ments made in respect of the price of the aircraft and are deducted from the final price on delivery.
The deposits as at 31 December 2014 are in respect of aircraft purchases which will be delivered from January 2015 to May 2025.
During the financial year ended 31 December 2014, the Group and Company capitalised borrowing costs amounting to RM10,054,000 (2013: RM10,460,000) on qualifying
assets. Borrowing costs were capitalised at the rate of 4.90% (2013: 5.48%) per annum.
15 OTHER DEPOSITS AND PREPAYMENTS
Other deposits and prepayments include prepayments for maintenance of aircraft and deposits paid to lessors for leased aircraft. These prepayments and deposits are denom-
inated in US Dollar.
