KU Financial Report
Notes to the Financial Statements
Continued...
f) Leased assets
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards
incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.
Company as lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except
where another systematic basis is more representative of the time pattern in which economic benefits from the
leased asset are consumed.
Company as lessor
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.
Lease incentives
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as
a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-
line basis, except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed.
g) Revenue
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue
are net of discounts, refunds and amounts collected on behalf of third parties. The Company recognises revenue
when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to
the Company and specific criteria have been met for each of the Company’s activities as described below.
Fundraising
Fundraising is recorded when the income is received or receivable.
Rendering of services
Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract.
Government funding
Government funding agreements are contracted agreements with the Government to provide a variety of early
childhood education and care programs in the community. They are received in the form of transfers of resources
to the company in return for past or future compliance with certain conditions relating to the operating activities
of the company. Non-reciprocal government funding monies, other than monies held in trust, are credited to
income when received in accordance with AASB 1004 “Contributions”. Other service revenues from government
agencies are recognised upon delivery of services in accordance with AASB 118 “Revenue”.
Government Brokered Programs
Funds are received from Government Brokered Programs by KU Children’s Services for the allocation to
recipients who provide a variety of early childhood education and care programs in the community. The entity
acts as an agent for these programs. The funds received and allocated are not recognised in the Statement of
Comprehensive Income in accordance with AASB118 Revenue. Cash flows are included in the Statement of
Cash Flows on a gross basis.
Unit trust distributions and interest revenue
Unit trust distributions from investments are recognised when the unit holder’s right to receive payment has
been established.
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life
of the financial assets to that asset’s net carrying amount.
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KU Children’s Services