Notes to the Financial Statements For the financial year ended 31 December 2025 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONT’D) 2.19 Expenses (a) Property expenses Property expenses are recognised on an accrual basis. Included in property expenses are the property manager’s fees which are based on the applicable rates stipulated in Notes 1E, 1F and 1H. (b) Management fees Management fees are recognised on an accrual basis based on the applicable rates stipulated in Note 1B. (c) Trust expenses Trust expenses are recognised on an accrual basis. Included in trust expenses are the trustee’s fees which are based on the applicable rates stipulated in Note 1A. (d) Borrowing costs Borrowing costs comprise interest expense on borrowings and amortisation of debt-related transaction costs, which are recognised in the statement of total return using the effective interest method over the period of borrowings. 2.20 Taxation (a) Current tax and deferred tax Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in the statement of total return except to the extent that it relates to items directly related to Unitholders’ funds, in which case it is recognised in Unitholders’ funds. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: • temporary differences on the initial recognition of goodwill or assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and • temporary differences related to investment in subsidiaries and joint venture to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For investment property that is measured at fair value, the presumption that the carrying amount of the investment property will be recovered through sale has not been rebutted. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. 168 ESR-REIT ANNUAL REPORT 2025
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