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Notes To The Financial Statements

VITROX CORPORATION BERHAD

[649966-K]

For The Financial Year Ended 31 December 2008

2.

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

2.15 Share Capital

Ordinary shares are classified as equity. Transaction costs that relate to the issue of new shares are accounted for as a

deduction from equity.

Dividends on shares declared and unpaid at the balance sheet date are recognised as a liability whereas dividends

proposed or declared after the balance sheet date are disclosed by way of note to the financial statements.

2.16 Income Recognition

Income from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred

to the buyer.

Dividend income is recognised when the right to receive payment is established.

Interest income is recognised using the effective interest method.

2.17 Income Taxes

Income taxes for the year comprise current tax and deferred tax.

Current tax represents the expected amount of income taxes payable in respect of the taxable profit for the year and is

measured using the tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is provided for under the balance sheet liability method in respect of all temporary differences between

the carrying amount of an asset or liability in the balance sheet and its tax base except for those temporary differences

associated with goodwill, negative goodwill or the initial recognition of an asset or liability in a transaction which is not

a business combination and affects neither accounting nor taxable results at the time of the transaction.

A deferred tax liability is recognised for all taxable temporary differences whereas a deferred tax asset is recognised for

all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future

taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax

credits can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the

period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively

enacted by the balance sheet date.

2.18 Employee Benefits

Short-term Employee Benefits

Short-term employee benefits such as wages, salaries, bonuses and social security contributions are recognised as an

expense or included in development expenditure, where appropriate, in the period in which the associated services are

rendered by the employee.

Defined Contribution Plans

As required by law, employers in Malaysia make contributions to the state pension scheme, Employees Provident Fund

(“EPF”). A foreign subsidiary makes contributions under certain defined contribution plans of the People’s Republic of

China. Contributions to defined contribution plans are recognised as an expense or included in development expenditure,

where appropriate, in the period in which the associated services are rendered by the employee.