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4.8 Income tax
Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax
expense (deferred tax income).
The current income tax expense is the amount payable by the Company as a result of income tax
settlements for a given year. Tax credits and other tax benefits, excluding tax withholdings and
pre-payments, and tax loss carryforwards from prior years effectively offset in the current year
reduce the current income tax expense.
The deferred tax expense or income relates to the recognition and derecognition of deferred tax
assets and liabilities. These include temporary differences measured at the amount expected to be
payable or recoverable on differences between the carrying amounts of assets and liabilities and
their tax bases, and tax loss and tax credit carryforwards. These amounts are measured at the tax
rates that are expected to apply in the period when the asset is realised or the liability is settled.
Deferred tax liabilities are recognised for all taxable temporary differences, except for those arising
from the initial recognition of goodwill or of other assets and liabilities in a transaction that is not a
business combination and affects neither accounting profit (loss) nor taxable profit (tax loss).
Deferred tax assets are recognised to the extent that it is considered probable that the Company
will have taxable profits in the future against which the deferred tax assets can be utilised.
Deferred tax assets and liabilities arising from transactions charged or credited directly to equity
are also recognised in equity.
The deferred tax assets recognised are reassessed at the end of each reporting period and the
appropriate adjustments are made to the extent that there are doubts as to their future
recoverability. Also, unrecognised deferred tax assets are reassessed at the end of each reporting
period and are recognised to the extent that it has become probable that they will be recovered
through future taxable profits.
In 2001 the Company began to be taxed on a consolidated basis with other Group companies (see
Note 16). In this connection, in calculating its income tax, the Company took into consideration
the corresponding Spanish Accounting and Audit Institute (ICAC) resolutions, establishing the
methods for the recognition of income tax at companies that file consolidated tax returns.
4.9 Revenue and expense recognition
Revenue and expenses are recognised on an accrual basis, i.e. when the actual flow of the related
goods and services occurs, regardless of when the resulting monetary or financial flow arises.
Revenue is measured at the fair value of the consideration received, net of discounts and taxes.
Revenue from sales is recognised when the significant risks and rewards of ownership of the goods
sold have been transferred to the buyer, and the Company retains neither continuing managerial
involvement to the degree usually associated with ownership nor effective control over the goods
sold.
Revenue from the rendering of services is recognised by reference to the stage of completion of
the transaction at the end of the reporting period, provided the outcome of the transaction can be
estimated reliably.
At present, the Company basically obtains revenue from the sale of advertising space; this
revenue is recognised in the statement of profit or loss when the related advertising spot is
broadcast.
Interest income from financial assets is recognised using the effective interest method and
dividend income is recognised when the shareholder's right to receive payment has been
established. Interest and dividends from financial assets accrued after the date of acquisition are
recognised as income.