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Notes to the Financial Statements

For the year ended 30 June 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i) Intangible assets (continued)

costs that are specifically chargeable to the customer under the terms of the contract. The stage of completion is measured as a percentage complete of the construction contract.

Summarised information in respect of the intangible asset for the current and comparative period is as follows:

Type of asset:

AVJennings brand name acquired by way of a business combination

Useful life of the asset: Amortisation method:

Finite

Straight line basis over a 20 year life

Impairment testing:

At each reporting date or whenever an indicator of impairment exists

k) rade and other receivables

Trade receivables are carried at original invoice amount less a provision for impairment.

Settlement terms for trade receivables are:

Development housing and land sales – generally between 30 and 180 days

Contract building (progress billing) – generally between 7 and 30 days

Derecognition

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset is derecognised.

Collectability of trade receivables is reviewed on an on-going basis. Receivables that are known to be uncollectible are written-off by reducing the carrying amount. A provision for impairment of trade receivables is established when there is objective evidence that the Consolidated Entity will not be able to collect the outstanding amount.

j) Inventories

Inventories are stated at the lower of cost and net realisable value.

Where a trade or other receivable is expected to be settled more than twelve months after the reporting date, its carrying amount is discounted using the effective interest rate method. The difference between the carrying amount and the present value is recorded in the Income Statement.

Net realisable value

Net realisable value is determined on the basis of sales of each class of inventory in the ordinary course of business. Estimated costs of selling are deducted in establishing the net realisable value.

Development work-in-progress

l) Cash and cash equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at bank and on hand and short-term deposits with a maturity of three months or less, that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value.

Cost includes variable and fixed costs directly related to specific contracts and other costs specifically chargeable under the contracts. Costs expected to be incurred under penalty clauses and rectification provisions as well as borrowing costs, rates and land taxes are also included.

For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities on the Balance Sheet.

Land and property held for resale

Cost includes the cost of acquisition, development and holding costs such as borrowing costs, rates and land taxes incurred during construction and development. Holding costs incurred after completion of development are expensed.

m)

Interest-bearing loans and borrowings

All interest-bearing loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs.

Construction contracts

Construction work-in-progress is stated at the aggregate of contract costs incurred to date plus recognised profits less recognised losses and progress billings. Contract costs include all costs directly related to specific contracts, and

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.

AVJennings Limited ABN 44 004 327 771 33

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