| 28. | Deferred Income Tax and Income Tax Expense |
The analysis of deferred tax assets and deferred tax liabilities as of December 31, 2016 and 2017, is as follows:
| (In millions of Korean won) | 2016 | 2017 | ||||||
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Deferred tax assets |
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Deferred tax assets to be recovered within 12 months |
₩ | 265,997 | ₩ | 318,339 | ||||
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Deferred tax assets to be recovered after |
1,124,420 | 1,140,252 | ||||||
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| ₩ | 1,390,417 | ₩ | 1,458,591 | |||||
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Deferred tax liabilities |
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Deferred tax liability to be recovered within 12 months |
(48,033 | ) | (15,705 | ) | ||||
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Deferred tax liability to be recovered
after |
(778,655 | ) | (859,126 | ) | ||||
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| (826,688 | ) | (874,831 | ) | |||||
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Deferred tax assets after offsetting |
₩ | 701,409 | ₩ | 712,222 | ||||
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Deferred tax liabilities after offsetting |
₩ | 137,680 | ₩ | 128,462 | ||||
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The gross movements on the deferred income tax account for the years ended December 31, 2016 and 2017, are calculated as follows:
| (In millions of Korean won) | 2016 | 2017 | ||||||
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Beginning |
₩ | 715,747 | ₩ | 563,729 | ||||
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Charged(credited) to the statement of profit or loss |
(152,102 | ) | (1,771 | ) | ||||
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Charged(credited) to other comprehensive income |
84 | 21,802 | ||||||
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Ending |
₩ | 563,729 | ₩ | 583,760 | ||||
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The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
| (In millions of Korean won) | 2016 | |||||||||||||||
| Beginning |
Statement of operations |
Other comprehensive income |
Ending | |||||||||||||
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Deferred tax liabilities |
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Derivative instruments |
₩ | (19,155 | ) | ₩ | (33,569 | ) | ₩ | 3,536 | ₩ | (49,188 | ) | |||||
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Available-for-sale financial assets |
(29,430 | ) | (10 | ) | (2,262 | ) | (31,702 | ) | ||||||||
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Investment in subsidiaries, associates and joint ventures |
(50,235 | ) | (666 | ) | 155 | (50,746 | ) | |||||||||
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Depreciation |
(53,872 | ) | 14,374 | — | (39,498 | ) | ||||||||||
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Advanced depreciation provision |
(231,692 | ) | 6,005 | — | (225,687 | ) | ||||||||||
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Deposits for severance benefits |
(251,924 | ) | (55,806 | ) | — | (307,730 | ) | |||||||||
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Accrued income |
(1,808 | ) | (216 | ) | — | (2,024 | ) | |||||||||
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Reserve for technology and human resource development |
(1,216 | ) | 469 | — | (747 | ) | ||||||||||
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Others |
(135,802 | ) | 16,436 | — | (119,366 | ) | ||||||||||
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| (775,134 | ) | (52,983 | ) | 1,429 | (826,688 | ) | ||||||||||
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Deferred tax assets |
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Provisions for impairment on trade receivables |
136,743 | (26,467 | ) | — | 110,276 | |||||||||||
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Inventory valuation |
56 | (8 | ) | — | 48 | |||||||||||
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Contribution for construction |
19,618 | (1,527 | ) | — | 18,091 | |||||||||||
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Accrued expenses |
64,117 | 16,239 | — | 80,356 | ||||||||||||
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Provisions |
20,353 | (132 | ) | — | 20,221 | |||||||||||
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Property, plant and equipment |
239,791 | (6,876 | ) | — | 232,915 | |||||||||||
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Retirement benefit obligations |
331,980 | 41,857 | (1,345 | ) | 372,492 | |||||||||||
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Withholding of facilities expenses |
7,360 | (450 | ) | — | 6,910 | |||||||||||
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Accrued payroll expenses |
21,634 | 4,281 | — | 25,915 | ||||||||||||
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Deduction of installment receivables |
10,513 | 3,374 | — | 13,887 | ||||||||||||
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Assets retirement obligation |
16,974 | 1,112 | — | 18,086 | ||||||||||||
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Gain or loss foreign currency translation |
43,283 | 24,418 | — | 67,701 | ||||||||||||
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Deferred revenue |
43,792 | (17,679 | ) | — | 26,113 | |||||||||||
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Real-estate sales |
2,980 | 871 | — | 3,851 | ||||||||||||
| (In millions of Korean won) | 2016 | |||||||||||||||
| Beginning |
Statement of operations |
Other comprehensive income |
Ending | |||||||||||||
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Tax credit carryforwards |
212,820 | (13,221 | ) | — | 199,599 | |||||||||||
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Accumulated deficit |
107,485 | (107,485 | ) | — | — | |||||||||||
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Others |
211,382 | (17,426 | ) | — | 193,956 | |||||||||||
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| 1,490,881 | (99,119 | ) | (1,345 | ) | 1,390,417 | |||||||||||
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Net balance |
₩ | 715,747 | ₩ | (152,102 | ) | ₩ | 84 | ₩ | 563,729 | |||||||
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| (In millions of Korean won) | 2017 | |||||||||||||||
| Beginning |
Statement operations |
Other comprehensive income |
Ending | |||||||||||||
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Deferred tax liabilities |
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Derivative instruments |
₩ | (49,188 | ) | ₩ | 49,188 | ₩ | — | ₩ | — | |||||||
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Available-for-sale financial assets |
(31,702 | ) | (164 | ) | 1,346 | (30,520 | ) | |||||||||
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Investment in subsidiaries, associates and joint ventures |
(50,746 | ) | (42,659 | ) | (3,245 | ) | (96,650 | ) | ||||||||
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Depreciation |
(39,498 | ) | 39,498 | — | — | |||||||||||
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Advanced depreciation provision |
(225,687 | ) | (22,905 | ) | — | (248,592 | ) | |||||||||
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Deposits for severance benefits |
(307,730 | ) | (80,126 | ) | — | (387,856 | ) | |||||||||
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Accrued income |
(2,024 | ) | (126 | ) | — | (2,150 | ) | |||||||||
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Reserve for technology and human resource development |
(747 | ) | 433 | — | (314 | ) | ||||||||||
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Others |
(119,366 | ) | 10,617 | — | (108,749 | ) | ||||||||||
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| (826,688 | ) | (46,244 | ) | (1,899 | ) | (874,831 | ) | |||||||||
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Deferred tax assets |
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Derivative instruments |
— | 34,572 | (9,848 | ) | 24,724 | |||||||||||
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Provisions for impairment on trade receivables |
110,276 | 11,380 | — | 121,656 | ||||||||||||
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Inventory valuation |
48 | (48 | ) | — | — | |||||||||||
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Contribution for construction |
18,091 | 180 | — | 18,271 | ||||||||||||
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Accrued expenses |
80,356 | 10,683 | — | 91,039 | ||||||||||||
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Provisions |
20,221 | 3,858 | — | 24,079 | ||||||||||||
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Property, plant and equipment |
232,915 | (841 | ) | — | 232,074 | |||||||||||
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Retirement benefit obligations |
372,492 | 67,751 | 26,806 | 467,049 | ||||||||||||
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Withholding of facilities expenses |
6,910 | 472 | — | 7,382 | ||||||||||||
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Accrued payroll expenses |
25,915 | (10,786 | ) | — | 15,129 | |||||||||||
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Deduction of installment receivables |
13,887 | (13,887 | ) | — | — | |||||||||||
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Assets retirement obligation |
18,086 | 2,750 | — | 20,836 | ||||||||||||
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Gain or loss foreign currency translation |
67,701 | (67,558 | ) | — | 143 | |||||||||||
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Deferred revenue |
26,113 | 221 | — | 26,334 | ||||||||||||
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Real-estate sales |
3,851 | 4,847 | — | 8,698 | ||||||||||||
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Tax credit carryforwards |
199,599 | (48,823 | ) | — | 150,776 | |||||||||||
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Deficit carried over |
— | 2,699 | — | 2,699 | ||||||||||||
| (In millions of Korean won) | 2017 | |||||||||||||||
| Beginning |
Statement operations |
Other comprehensive income |
Ending | |||||||||||||
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Others |
193,956 | 47,003 | 6,743 | 247,702 | ||||||||||||
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| 1,390,417 | 44,473 | 23,701 | 1,458,591 | |||||||||||||
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Net balance |
₩ | 563,729 | ₩ | (1,771 | ) | ₩ | 21,802 | ₩ | 583,760 | |||||||
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The tax impacts recognized directly to equity as of December 31, 2015, 2016 and 2017, are as follows:
| 2015 | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
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(In millions of Korean won) |
Before recognition |
Tax effect |
After recognition |
Before recognition |
Tax effect |
After recognition |
Before recognition |
Tax effect |
After recognition |
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Available-for-sale valuation gain(loss) |
₩ | (47,515 | ) | ₩ | 11,499 | ₩ | (36,016 | ) | ₩ | 9,347 | ₩ | (2,262 | ) | ₩ | 7,085 | ₩ | (5,561 | ) | ₩ | 1,346 | ₩ | (4,215 | ) | |||||||||||||
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Hedge instruments valuation gain(loss) |
18,406 | (4,454 | ) | 13,952 | (14,611 | ) | 3,536 | (11,075 | ) | 40,694 | (9,848 | ) | 30,846 | |||||||||||||||||||||||
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Remeasurements from net defined benefit liabilities |
(49,963 | ) | 12,091 | (37,872 | ) | 5,558 | (1,345 | ) | 4,213 | (110,768 | ) | 26,806 | (83,962 | ) | ||||||||||||||||||||||
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Shares of gain(loss) of associates and joint ventures |
(5,297 | ) | 1,282 | (4,015 | ) | (641 | ) | 155 | (486 | ) | 13,410 | (3,245 | ) | 10,165 | ||||||||||||||||||||||
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Foreign currency translation adjustment |
(6,443 | ) | 1,559 | (4,884 | ) | (7,133 | ) | 1,726 | (5,407 | ) | (27,865 | ) | 6,743 | (21,122 | ) | |||||||||||||||||||||
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Total |
₩ | (90,812 | ) | ₩ | 21,977 | ₩ | (68,835 | ) | ₩ | (7,480 | ) | ₩ | 1,810 | ₩ | (5,670 | ) | ₩ | (90,090 | ) | ₩ | 21,802 | ₩ | (68,288 | ) | ||||||||||||
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Details of income tax expense(benefit) for the years ended December 31, 2015, 2016 and 2017, are calculated as follows:
| (In millions of Korean won) | 2015 | 2016 | 2017 | |||||||||
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Current income tax expense(benefit) |
₩ | (5,003 | ) | ₩ | 176,212 | ₩ | 268,885 | |||||
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Impact of change in deferred taxes |
232,134 | 152,102 | 1,771 | |||||||||
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Income tax expense |
₩ | 227,131 | ₩ | 328,314 | ₩ | 270,656 | ||||||
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The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the entities as follows:
| 2015 | 2016 | 2017 | ||||||||||
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Profit before income tax expense |
₩ | 710,741 | ₩ | 1,123,431 | ₩ | 816,997 | ||||||
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Statutory income tax expense |
₩ | 171,999 | ₩ | 271,870 | ₩ | 197,251 | ||||||
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Tax effect |
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Income not taxable for taxation purposes |
(21,881 | ) | (28,093 | ) | (19,268 | ) | ||||||
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Non-deductible expenses |
28,849 | 21,947 | 39,746 | |||||||||
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Tax credit |
(9,660 | ) | (13,764 | ) | (27,211 | ) | ||||||
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Additional payment of income taxes |
997 | (4,780 | ) | 976 | ||||||||
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Tax effect and adjustment on consolidation |
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Goodwill impairment |
23,185 | 31,847 | 20,475 | |||||||||
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Eliminated dividend income form subsidiaries |
20,452 | 40,087 | 34,305 | |||||||||
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Changes of out-side tax effect |
9,844 | (567 | ) | 17,990 | ||||||||
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Others |
3,346 | 9,767 | 6,392 | |||||||||
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Income tax expense |
₩ | 227,131 | ₩ | 328,314 | ₩ | 270,656 | ||||||
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