Jockey Club Racecourses Limited Notes to the financial statements Year ended 31 December 2021
1.
Accounting policies (continued) Investments Shares in group companies, associates and other investments, all of which are unlisted, are stated at cost less provision for any impairment in value. Stocks Stocks comprising goods for resale are valued at the lower of cost (purchase price) and net realisable value. Current and deferred taxation The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except that a change attributable to an item of income or expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date. Deferred balances are recognised in respect ofall timing differences that have originated but not reversed by the reporting date, except: • The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; • Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and • Where timing differences relate to interests in subsidiaries, associates, branches and joint ventures and the company can control their reversal and such reversal is not considered probable in the foreseeable future. Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date. Capital grants Capital grants are received from the Horserace Betting Levy Board ("HBLB") in respect of capital expenditure. The company has adopted the accruals model for accounting for capital grants. Capital grants received are taken to the grant account. Credits are made to the income statement by equal annual instalments that match the period over which the relevant fixed assets are depreciated, typically a period of 30 years. Leases Where assets are financed by leasing agreements that give rights approximately to ownership (finance leases), the assets are treated as if they have been purchased outright. The amount capitalised is the present value of the minimum lease payments payable over the term of the lease. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is charged to profit or loss over the shorter of estimated useful economic life and the term of the lease. Lease payments are analysed between capital and interest components so that the interest element ofthe payment is charged to profit or loss over the term of the lease and is calculated so that it represents a constant proportion of the balance of capital repayments outstanding. The capital part reduces the amounts payable to the lessor. All other leases are treated as operating leases. Their annual rentals are charged to profit or loss on a straight- line basis over the term of the lease. 651
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