Notes to the Consolidated Financial Statements
27
Dar Al-Maal Al-Islami Trust
Annual Report 2013
are charged in the consolidated
statement of income in the year to
which they relate.
Taxation
Taxes are provided and charged
in the consolidated statement of
income on the basis of the estimated
tax expense payable currently and
in future years, arising in respect of
the results of current operations.
The current income tax charge is
calculated on the basis of tax laws
enacted or substantively enacted at
the date of the statement of financial
position in the countries where the
Group’s subsidiaries and associates
operate.
Deferred income taxes
Deferred income tax is provided,
using the comprehensive liability
method, for all temporary
differences arising between the tax
bases of assets and liabilities and
their respective carrying values
for financial reporting purposes.
The amount of deferred taxes on
these differences is determined
using the provisions of local tax
laws, including rates, and is
adjusted upon enactment of changes
in these laws. Provision is made
for potential taxes which could
arise on the remittance of retained
overseas earnings where there is
a current intention to remit such
earnings.
A deferred tax asset is recognised for
all deductible temporary differences
and carry forward of unused
tax losses and tax credits to the
extent that it is probable that future
taxable profit will be available
against which the deductible
temporary differences and unused
tax losses and tax credits can be
utilised.
Deferred tax related to fair value
remeasurement of investments
available-for-sale which is charged
or credited directly to the statement
of comprehensive income, is also
credited or charged directly to
statement of comprehensive income
and is subsequently recognised
in the consolidated statement of
income together with the deferred
gain or loss.
Deferred tax related to fair value
remeasurement of investment
property, which is charged or credited
to the consolidated statement of
income, is also charged or credited
to the consolidated statement of
income.
Trust capital
and treasury stock
Dividends on participation units
Dividends on participation units
are recognised in Trust capital in
the period in which they are
declared.
Treasury stock
Where DMI purchases its own
capital or obtains rights to purchase
its own capital, the consideration
paid is shown as a deduction from
Trust capital. Gains and losses on
sales of own capital are charged
or credited to the treasury stock
account in Trust capital.
Fiduciary risk reserve
The fiduciary risk reserve is a
component of Trust capital and
is established by an appropriation
of net results, other reserves or
by a transfer from paid in capital,
for the financial year to cover
potential fiduciary risks which might
arise and which are not subject
to other specific provision, in the
Group’s capacity as fund manager.
The fiduciary risk reserve is not
distributable.
Acceptances
Acceptances comprise undertakings
by the Group to pay bills of
exchange drawn on customers. The
Group expects most acceptances to
be settled simultaneously with the
reimbursement from the customers.
Acceptances are accounted for
as off-balance sheet transactions
and are disclosed as contingent
liabilities and commitments, unless
payment is probable.
Cash and cash equivalents
For the purposes of the cash
flow statement, cash and cash
equivalents comprise balances
with maturities of three months or
less from the date of acquisition,
including cash and non-restricted
balances with central banks, loans
and advances to banks, amounts
due from other banks and short-
term government securities.
Fiduciary activities
The Group through its asset
management subsidiary provides
fund management and advisory
services to third parties which
involve the Group making allocation
and purchase and sale decisions in
relation to a wide range of financial
instruments. Those assets that
are held in a fiduciary capacity
are not included in these financial
statements.
Income arising from fund
management and advisory services
comprises the revenues earned from
the management of the funds in the
modarabas accrued on the basis
of the terms and conditions of the
related management agreements.
Funds under management represent
amounts invested by clients and
placed with funds managed by the
Group.
3. Critical accounting
estimates and
judgements in applying
accounting policies
The Group makes estimates
and assumptions that affect the
reported amounts of assets and
liabilities, income and expenses.
Estimates and judgements are
continually evaluated and are
based on historical experience and
other factors, including expectations
of future events that are believed to be
reasonable under the circumstances.
The estimates and assumptions
that have a significant risk of
causing a material adjustment to
the carrying amounts of assets
and liabilities within the next
financial year are discussed
below:
Impairment of investments
in financings
The Group reviews its investments
in financings to assess impairment
at least on a quarterly basis. In
