FINANCIALS
KU
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3 . Summary of Accounting Policies ( continued )
Government funding - capital Funds are received from government departments in accordance with contracts to undertake capital works programs on behalf of the department . In accordance with AASB 1004 “ Contributions ”, this income is recognised upfront once control of the funds or the commitment to receive funds has been satisfied .
Government Brokered Programs Funds are received from Government Brokered Programs by KU for the allocation to recipients who provide a variety of early childhood education and care programs in the community . The funds received and allocated are recognised in the Statement of Profit or Loss and Other Comprehensive Income in accordance with AASB 118 “ 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 .
i ) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits . Cash equivalents are shortterm , highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value .
j ) Term deposits Term deposits comprise investment deposits held with banks with short to medium term maturity periods . The investments are measured at amortised cost using the effective interest method , less any impairment . Interest income is recognised by applying the effective interest rate . k ) 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 .
l ) 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 .
m ) General funds and reserves General Funds The general funds represent the retained earnings of the Company that are not designated for particular purposes .
Fundraising Reserve The fundraising reserve arises from the accumulated surpluses generated as a result of the efforts of parents and staff to allow services to purchase 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 .
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 .
n ) 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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