2. Summary of Accounting Policies (continued)
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 Profit and Loss and Other 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.
h) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
i) Trade and other receivables
Trade receivables, which comprise amounts due from services provided, are recognised and carried at original
invoice amount less an allowance for uncollectible amounts. Normal terms of settlement are 7 days. The carrying
amount of the receivable is deemed to reflect fair value.
An allowance for doubtful debts is made when there is objective evidence that the company will not be able to
collect the debts. Bad debts are written off when identified.
j) Income tax
The Company is exempt from income tax under s50-5 of the Income Tax Assessment Act, as it is an income tax
exempt charitable entity. As a consequence, there is no income tax attributable to the operating result.
k) General funds and reserves
General Funds
The general funds represent the funds of the Company that are not designated for particular purposes.
Fundraising Reserve
The fundraising reserve arises from the accumulated efforts of parents and staff to allow services to purchase
optional toys and equipment, to assist the service to expand and develop to meet local needs and to allow
parents to share in the life of the service and to make a concrete contribution to their children’s lives.
Available-for-sale Reserve
The Available-for-Sale reserve arises on the revaluation of available-for-sale financial assets. Where a revalued
financial asset is sold, that portion of the reserve which relates to that financial asset, and is effectively realised, is
recognised in profit or loss. Where a revalued financial asset is impaired that portion of the reserve which relates
to that financial asset is recognised in profit or loss.
Program Reserve
The Program reserve arises from surpluses on the programs that have been allocated to the Company for future
liabilities that may arise which the Company will be accountable for.
l) Donations in kind
Over the course of the year the Company has received donations in kind from a number of local councils in the
form of the right to use premises at discounted rent. The Company is of the view that it is not feasible to fair value
the services received accurately and as such it has not brought to account discounted rent as a donation.
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