consideration is deferred, cost is determined by discounting
the amounts payable in the future to their present value as
at the date of acquisition.
Depreciation is provided on plant, furniture and equipment,
motor vehicles and computers, including freehold buildings
but excluding land and buildings on leased property.
Depreciation is calculated on a straight line basis so as to
write off the net cost of each asset over its expected useful
life to its estimated residual value. The estimated useful lives,
residual values and depreciation method ar e reviewed at the
end of each annual reporting period.
The following estimated useful lives are used in the calculation
of depreciation:
• Buildings
40.0 years
• Buildings – fixtures and fittings 6.7-10 years
• Plant, furniture and equipment 6.7-10 years
• Motor vehicles
4.4 years
• Computers
4.0 years
d) Employee Benefits
A liability is recognised for benefits accruing to employees
in respect of wages and salaries, annual leave, long service
leave and rostered days off when it is probable that settlement
will be required and they are capable of being measured
reliably.
Liabilities recognised in respect of employee benefits
expected to be settled within 12 months are measured
using the remuneration rate expected to apply at the time
of settlement.
Liabilities recognised made in respect of employee benefits
which are not expected to be settled within 12 months are
measured as the present value of the estimated future cash
outflows to be made by the company in respect of services
provided by employees up to reporting date.
e) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
i) where the amount of GST incurred is not recoverable from
the taxation authority, it is recognised as part of the cost
of acquisition of an asset or as part of an item of expense; or
ii) for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables.
Cash flows are included in the cash flow statement on a
gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from,
or payable to, the taxation authority is classified as operating
cash flows.
f) Financial Assets
Investments are recognised and derecognised on trade date
where purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the
timeframe established by the market concerned, and are initially
measured at fair value, net of transaction costs except for those
financial assets classified as at fair value through profit or loss
which are initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets ‘available-for-sale’ and ‘loans and
receivables’. The classification depends on the nature and
purpose of the financial assets and is determined at the time
of initial recognition.
Loans and Receivables
Trade receivables, loans, and other receivables are recorded
at amortised cost using the effective interest rate method less
impairment.
Available-for-Sale Financial Assets
Managed funds held by the company are classified as being
available-for-sale and are stated at fair value less impairment. Fair
value is determined using the closing market prices at year end.
Gains and losses arising from changes in fair value are recognised
directly in the available-for-sale revaluation reserve, until the
investment is disposed of or is determined to be impaired, at
which time the cumulative gain or loss previously recognised
in the available-for-sale revaluation reserve is included in profit
or loss for the period.
g) Impairment of Company Assets
At each reporting date, the company reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the company
estimates the recoverable amount of the cash-generating unit
to which the asset belongs. Where a reasonable and consistent
basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation basis
can be identified.
Recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted. If
the recoverable amount of an asset (or cash- generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in
profit or loss immediately, unless the relevant asset is carried
at fair value, in which case the impairment loss is treated as a
revaluation decrease.
KU’s 112 Annual Report 2007
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