Notes to the Financial Statements
For the year ended 30 June 2009
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Contributions to superannuation plans are recognised as an expense in the Income Statement when contributions are paid or become payable.
A liability is recognised in current trade and other payables for employee bonus entitlements where there is a contractual obligation or where a precedent has been set, creating a
When the Consolidated Entity expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is recorded in the Income Statement net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date using a discounted cash flow methodology. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate
that reflects the time value of money and risks specific to the liability. The increase in provision resulting from the passage of time is recognised in finance costs.
p) Share-based payment transactions
Share-based compensation benefits are provided to the Chief Executive Officer via the AVJ Deferred Employee Share Plan. The cost of these equity-settled transactions is measured at the fair value of the shares at the grant date. The market value at the grant date is taken to be the fair value.
The original cost of equity-settled transactions is treated as a reduction in share capital and the underlying shares identified separately as treasury shares. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period.
Consolidated Entity as lessee
o) Employee benefits
Wages, salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be settled within 12 months of the reporting date, are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
Long service leave
The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the project unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted at a pre-tax rate that reflects the time value of money.
Finance leases, which transfer to the Consolidated Entity substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and a reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Consolidated Entity will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the Income Statement on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.