NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
(i) Foreign currencies
Transactions in foreign currencies are recorded at the rate
of exchange ruling at the date of the transaction or at the
contracted rate if the transaction is covered by a forward
exchange contract. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the
rate of exchange at the balance sheet date or the
appropriate forward contract rate. All differences are taken
to the income and expenditure account.
(j) Deferred taxation
Deferred taxation is provided using the full provision
method following adoption of FRS19. Deferred taxation is
recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date.
Deferred tax assets and liabilities are calculated at the tax
rate expected to be effective at the time that the timing
differences are expected to reverse, and are not discounted.
Deferred tax assets are recognised to the extent that it is
regarded more likely than not that they will be recovered.
(k) Investment income
Investment income is accounted for on an accruals basis.
(l) Operating leases
Operating lease rentals are charged to the income and
expenditure account on a straight line basis over the term
of the lease.
(m) Pension costs
Under the terms of the arrangements between the
company and MDU Services Ltd the company is responsible
for any deficit of the pension scheme for which MDU
Services Ltd is the principal employer. FRS17 has been fully
adopted.
The assets of the defined benefit pension scheme are
measured at their market value at the balance sheet date
and the liabilities of the scheme are measured using the
projected unit method. The discount rate used is the
current rate of return on an AA corporate bond of
equivalent term to the liabilities. The following is charged
to the income and expenditure account:
• the increase in the present value of pension scheme
liabilities arising from employee service in the current
period;
• the increase in the present value of pension scheme
liabilities as a result of benefit improvements over the
period during which such improvements vest;
• gains and losses arising on settlements/curtailments;
• a credit in respect of the expected return on the scheme’s
assets; and
• a charge in respect of the increase during the period in
the present value of the scheme’s liabilities because the
benefits are one period closer to settlement.
Actuarial gains and losses are recognised in the statement
of total recognised gains and losses.
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