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PUMPKIN PATCH LIMITED & SUBSIDIARIES STATEMENT OF ACCOUNTING POLICIES FOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)

Impairment

Annually, the directors assess the carrying value of each asset.Where the estimated recoverable amount of the asset is less than its carrying amount, the asset is written down. The impairment loss is recognised in the statements of financial performance.

Employee Entitlements

Employee entitlements to salaries and wages, annual leave, long service leave and other benefits are recognised when they accrue to employees.

The liability for employee entitlements is carried at the present value of the estimated future cash outflows.

Financial Instruments

Recognised

Financial instruments carried on the statement of financial position include cash and bank balances, investments, receivables, trade creditors and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

Forward exchange contracts entered into as hedges of foreign exchange assets and liabilities are valued at exchange rates prevailing at period end. Any unrealised gains or losses are offset against foreign exchange gains and losses on the related asset or liability. Premiums paid on currency options are amortised over the period to maturity.

Unrecognised

Financial instruments with off-balance sheet risk, have been entered into for the primary purpose of reducing exposure to fluctuations in foreign exchange rates and interest rates. While financial instruments are subject to risk that market rates may change subsequent to acquisition, such changes would generally be offset by opposite effects on the items hedged.

Financial instruments purchased with the intention to be held for the long term or until maturity are recorded at original cost, adjusted for amortisation of premiums and discounts to maturity.

Statements of Cashflows

The following are the definitions of the terms used in the Statements of Cashflows:

  • (i)

    Cash is considered to be cash on hand and current accounts in the bank, net of bank overdrafts.

  • (ii)

    Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and equipment and of investments. Investments can include securities not falling within the definition of cash.

  • (iii)

    Financing activities are those activities which result in changes in the size and composition of the capital structure of the Group. This includes both equity and debt not falling within the definition of cash. Dividends paid in relation to the capital structure are included in financing activities.

  • (iv)

    Operating activities include all transactions and other events that are not investing or financing activities.

Changes in Accounting Policies

There were no changes to accounting policies during the period.

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