Fitzroy Learning Network Inc.
Annual Financial Report
For the year ended 30 June 2016
Notes to the Financial Statements
Note 3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements.
(a) Income tax
The Organisation is exempt from income tax by virtue of Subdivision 50-B of the Income Tax Assessment Act
1997 .
(b) Provisions
A provision is recognised if, as a result of a past event, the Association has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the liability.
(c) Financial instruments
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents and trade
and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value
through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative
financial instruments are measured as described below.
Cash and cash equivalents comprise cash balances and call deposits.
Accounting for interest income is discussed in note 3(h).
(ii) Other
Other non-derivative financial instruments are measured at amortised cost using the effective interest method,
less any impairment losses.
(d) Impairment
(i) Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events
have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the original
effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment
loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.
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