Income Tax

12 Months Ended

10 Months Ended

Mar. 31, 2012

Studio II Brands, Inc. (Successor)

Feb. 09, 2011

Hippo Lace Limited (Predecessor)

Income Tax:

Income Tax

NOTE 13 INCOME TAX

The Company and its subsidiaries are subject to income tax on an entity basis on income arising in or derived from the tax jurisdictions in which they operate.

The Company and HLL have not provided for income tax due to continuing loss.  Substantially all of the Company’s income before income tax expenses is generated by its operating subsidiary, Legend Sun, in Hong Kong.

A reconciliation of the expected income tax expense (based on HK income tax rate) to the actual income tax expense is as follows:

	Year ended, March 31, 2012	Successor From February 10, 2011 to  March 31,2011	Predecessor From April 1, 2010 to February 9, 2011
(Loss) / Income before tax	$      (114,985)	$   (30,197)	$            3,106
HK income tax rate	16.5%	16.5%	16.5%
Expected income tax expenses calculated at HK income tax rate	(18,972)	(4,983)	512
Tax effect of non-deductible expenses	22,610	13,636	-
Temporary difference	10,139	(7,927)	3,798
Actual income tax (expenses)/benefit	$         (6,501)	$             726	$            4,310

The Company's income tax provision in respect of operations in Hong Kong is calculated at the applicable tax rates on the estimated assessable profits for the year based on existing legislation, interpretations and practices in respect thereof. The standard tax rate applicable to the Company was 16.5%. The temporary difference of $10,139 for the year ended March 31, 2012 represents income tax provision and $7,927 for the period from February 10, 2011 to March 31, 2011 represents the difference between depreciation expenses and depreciation tax allowance for the plant and machinery.  No deferred tax liability has been provided as the amount involved is immaterial.

NOTE 11 INCOME TAX

The Company and its subsidiaries are subject to income tax on an entity basis on income arising in or derived from the tax jurisdictions in which they operate.

Substantially all of the Company’s income before income tax expenses is generated by its operating subsidiary, Legend Sun, in Hong Kong.

A reconciliation of the expected income tax expense (based on HK income tax rate) to the actual income tax expense is as follows:

	Period from  April 1, 2010 to  February 9, 2011	Period from  February 24, 2010 to March 31, 2010
Income before tax	3,106	$ 18,569
HK income tax rate	16.5%	16.5%
Expected income tax expenses calculated at
HK income tax rate	512	3,064
Temporary difference	3,798	(643)
Actual income tax expense	$   4,310	$      2,421

The Company's income tax provision in respect of operations in Hong Kong is calculated at the applicable tax rates on the estimated assessable profits for the year based on existing legislation, interpretations and practices in respect thereof. The standard tax rate applicable to the Company was 16.5%. The temporary difference of $3,798 mainly represents adjustment of overprovision of income tax due to loss result for February 2011 and posted at February month end account closing.  The tax adjustment attributed to the loss for the period from February 1 to 9, 2011 is $249 and immaterial. No deferred tax liability has been provided as the amount involved is immaterial.