KU Financial Report
3. Summary of Accounting Policies (continued)
The following significant accounting policies have been adopted in the preparation and presentation of the financial report:
a) Property, plant and equipment
Land and buildings, leasehold improvements, furniture and office equipment, motor vehicles and computers
are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly
attributable to the acquisition of the item. In the event that settlement of all or part of the purchase 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 furniture and office equipment, motor vehicles and computers, including freehold and
leasehold buildings but excluding land. 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 are reviewed at the end of each annual reporting period.
The following estimated useful lives are used in the calculation of depreciation:
• Buildings: 40 years
• Buildings fixtures and fittings: 4-10 years
• Leasehold Improvements: lease term or 10 years
• Furniture and office equipment: 4-10 years
• Motor vehicles: 6-7 years
The Company reviews its estimate of the useful lives of leasehold improvements at each reporting date, based on
the period over which an asset is expected to be available for use by the Company. The useful life of leasehold
improvements has been assessed to equal the lease term, or 10 years where no lease term was applicable. Land
is carried at cost and is not depreciated.
b) Intangible Assets
Intangible Assets comprise software assets. The estimated useful lives used to calculate amortisation are
between 3-5 years.
c) 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 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.
The Company pays contributions to certain defined contribution plans. Contributions are recognised in profit or
loss in the periods during which services are rendered by employees.
d) 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.
119th Annual Report 2014
3. Summary of Accounting Policies (continued)
e) Financial Assets
All financial assets are initially stated at cost, being the fair value of consideration given plus acquisition costs.
Purchases and sales of financial assets are recognised on trade date which is the date on which the Company
commits to purchase or sell the asset. Accounting policies for each category of financial assets subsequent to
initial recognition are set out below:
Loans and receivables
Trade receivables, loans, and other receivables are recorded at amortised cost using the effective interest rate
method less impairment. Impairment losses are measured as the difference between the investment’s carrying
amount and the present value of estimated future cash flows, excluding future credit losses that have not been
incurred. The cash flows are discounted at the investment’s original effective interest rate. Impairment losses are
recognised in profit or loss.
Available-for-sale financial assets
Available-for-sale investments are those financial assets that are designated as available-for-sale. When available-
for-sale financial investments are recognised initially,they are measured at fair value. Any available-for-sale
financial investments donated to the Company are recognised at fair value at the date the Company obtains
control of the asset.
After initial recognition available-for-sale financial investments are measured at fair value with gains or losses
being recognised in other comprehensive income until the investment is derecognised or until the investment is
determined to be impaired, at which time the cumulative gain or loss previously recognised in other comprehensive
income is reclassified to the Statement of Comprehensive Income.
The fair value of investments that are actively traded in organised financial markets is determined by reference
to quoted market bid prices at the close of business on the reporting date. For investments with no active
market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length
market transactions, reference to the current market value of another instrument that is substantially the same,
discounted cash flow analysis, and option pricing models.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment
at each balance date. Financial assets are impaired where there is objective evidence that as a result of one or
more events that occurred after the initial recognition of the financial asset the estimated future cash flows of
the investment have been impacted.
f) Impairment
The carrying values of property, plant and equipment are reviewed for impairment at each reporting date, with
the recoverable amount being estimated when events or changes in circumstances indicate that the carrying
value may be impaired.
The recoverable amount of property, plant and equipment is the higher of fair value less costs to sell and value in
use. Depreciated replacement cost is used to determine value in use. Depreciated replacement cost is the current
replacement cost of an item of plant and equipment less, where applicable, accumulated depreciation to date,
calculated on the basis of such cost.
g) 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.
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